$ETSY call buyers double their money

Etsy pulled back from 52-week highs today, but that didn’t stop option traders from making significant profits on upside option positions.

Back on June 13, Investitute’s proprietary programs cited the purchase of 3,000 September $15 calls for $1.10 as part of a bullish spread with shares at $13.66. This was clearly a new position, as volume was above the strike’s open interest.

Today those calls traded for $2.55, more than doubling in value. The stock rallied 27.4 percent in the same time period, an impressive gain but nowhere near that of its options on a relative basis.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

ETSY was down 3.32 percent today to close at $17.17, a session after reaching a 52-week high of $17.90. The online crafts marketplace gapped up from the $13.50 level after reporting a surprise quarterly profit on Aug. 3.