Traders post quick gains in $EWZ

Bullish option traders have already doubled their money on upside positions opened in the iShares MSCI Brazil Fund less than a week ago.

Last Thursday, Investitute’s market scanners identified the purchase of 7,000 February $42 calls for $0.90 as part of a bullish spread with shares at $40.36. This was clearly a new position, as open interest in the strike was only 294 contracts before the trade occurred. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls ended today’s session trading for $1.82, doubling their purchase price. The stock rose 4.7 percent at the same time, 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.

EWZ was up 1.2 percent today to close at $42.18. The exchange-traded fund has rallied with the price of commodities in recent weeks.