$NTES bulls double their money

NetEase has rallied sharply in the last week, yielding large gains today on upside option positions.

On Nov. 28, Investitute’s market scanners identified the purchase of 3,000 Weekly $345 calls expiring on Dec. 29 in one print for $6.70 with shares at $331.08. Open interest in the strike was a mere 11 contracts before the trade, showing that it was clearly a new position.

Those calls ended today’s session at $15.80, more than twice their purchase price. The stock rose 8.7 percent in the same time frame, illustrating the kind of leverage that can be achieved through options.

Long calls lock in the price where a 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 themselves.

NTES was up 3.85 percent today to close at $357.80. The Bejing-based Internet service and game developer announced plans to expand its e-commerce business last month and has gained recently along with Chinese leaders in that space, including Alibaba and JD.com.