Traders cashed in exponential gains before their bullish options in Intel expired today.
On Oct. 12, Investitute’s tracking systems detected the purchase of 5,000 December $42 calls in one print for $0.34 with shares at $39.28. Open interest in the strike was 1,295 contracts before that session began, showing that this was a new position.
Those calls traded for $2.73 this afternoon, more than 8 times their purchase price. The stock rose 13.8 percent in the same time period, underscoring how options can far outperform their underlying shares.
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.
INTC was up 3.01 percent today to close at $44.56. The chip maker, which gapped higher after its last earnings report in late October, has come back in favor after a long period of market neglect.