Gigamon calls yield huge returns

Traders have racked up exponential gains in Gigamon after just a few short sessions.

Last Wednesday, Investitute’s tracking systems identified the purchase of 7,600 July $35 calls for $0.70 to $1 with shares at $30.95. These were clearly new positions, as open interest in the strike was only 303 contracts before the activity appeared.

Those calls traded for $7.60 this afternoon, a gain of 660 percent to 985 percent depending on the purchase price. The stock soared 35.2 percent in the same time frame. but even that impressive move paled in comparison to the advance in the calls.

Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares.

GIMO jumped 17.71 percent today to close at $41.20. The networking and security technology company surged on news that activist investment group Elliott Management had taken a large stake in the firm.