$T traders quadruple their money

Bullish options in AT&T are dialing up huge profits.

On Nov. 14, Investitute’s market scanners found that 2,600 Weekly $36 calls expiring on Dec. 29 were purchased for $0.25 with shares at $33.83. This was clearly fresh buying, as open interest in the strike was a mere 63 contracts before the activity appeared.

Those calls ended yesterday’s session trading for $1.05, more than 4 times their purchase price. The stock rose 8.5 percent in the same period, illustrating how options can far outperform their underlying shares.

Investitute co-founder Pete Najarian cited even more buying in AT&T April calls on CNBC’s “Halftime Report” on Wednesday.

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.

T was up 1.55 percent yesterday to close at $36.73. The judge presiding over the federal government’s challenge to AT&T’s proposed acquisition of Time Warner set a March 19 trial date yesterday but said no ruling would be made before the deal’s April 22 deadline.