$INTC calls turn exponential profits

Option traders made a killing today in bullish positions opened in Intel earlier this month.

On Oct. 2, Investitute’s tracking systems found that 2,700 Weekly $38 calls expiring this afternoon were purchased for $0.89 to $1.10 with shares at $38.35. Open interest in the strike was only 789 contracts before the trades occurred, showing that this was fresh buying.

Those calls traded for $6.84 late today, more than 7.5 times their original purchase price. The stock rose 17 percent at the same time, illustrating how quickly options can far outpace gains in their underlying shares. It was the second winning call trade in Intel posted on Investitute this month.

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 jumped 7.38 percent to close at $44.40 today, its highest level since the dot-com collapse of 2000. The chip maker easily topped earnings estimates and raised its outlook last night.