$SPWR throws off heat for bulls

Option traders tripled their money in bullish positions on SunPower today.

On Oct. 13, Investitute’s proprietary programs cited the purchase of 5,000 January $9 calls for $0.33 and $0.34 with shares at $6.98. This was clearly fresh buying, as open interest was only 458 contracts before the activity appeared.

Those calls traded for $1.03 this morning, more than 3 times its original purchase prices. The stock surged 37.1 percent in the same time period, a large move but one that was still far below 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.

SPWR jumped 10.67 percent to $9.23 today. This morning Baird upgraded the solar-power company to “outperform” from “neutral” and raised its price target to $10 from $7.