$SPY bulls triple their money at highs

Option traders have consistently scored big on the SPDR S&P 500 Fund, and today was no exception,

On Sept. 21, Investitute’s proprietary programs identified the purchase of 40,000 December $257 calls at the same time for $1.13 with shares at $249.77. Open interest in the strike was 14,610 contracts before the trade occurred, showing that this was a new position. Investitute co-founder Jon Najarian cited a similar trade in the November $258 calls on CNBC’s “Halftime Report” Oct. 9.

The December calls traded for $3.89 today, nearly 3.5 times their original purchase price. The stock rose less than 2.5 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.

SPY was up 0.33 percent today to close at $258.45. Earlier in the afternoon the exchange-traded fund reached an all-time high of $258.50.