Traders ride $INTC rally to new highs

Intel hit a new 52-week high today, turning huge profits for bullish option positions.

On Sept. 11, Investitute’s market scanners identified the purchase of 10,100 November $35 calls for $1.58 to $1.62 with shares at $35.82. This was clearly fresh buying, as volume was far above the strike’s option interest of 2,114 contracts. Investitute co-founder Pete Najarian cited the unusual option activity at that time on CNBC’s “Halftime Report.”

Today those calls sold for $4.20, more than 2.5 times its original prices. The stock rose 9.1 percent in the same time frame, underscoring how options can far outperform their underlying shares.

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.

INTC was up 2.52 percent to $39.04 today. The chip maker, which had long lagged the rest of the industry, has been rallying this month and hit a new 52-week high of $39.09 today.