$P calls tune into more profits

Pandora has been music to the bulls’ ears.

On Sept. 7, Investitute’s market scanners found that 2,500 Weekly $9 calls expiring this Friday were purchased for $0.23 to $0.29 as part of a bullish roll with shares at $8.87. This was clearly a new position, as volume was more than double the strike’s open interest before the trade occurred.

Those calls sold for $1 this afternoon, more than 4 times their initial purchase price. The stock rose 12.74% at the same time frame, showing how quickly options can far outperform their underlying shares.

It was the second winning Pandora trade posted on Investitute in the last two weeks. Investitute co-founder Pete Najarian cited a series of unusual option activity in Pandora on CNBC’s “Halftime Report” on Aug. 30. Our tracking systems have logged eight bullish trades in the name in the last 10 sessions.

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.

P jumped 5.61% to $9.97 today. The music service and rival Spotify topped the list of app downloads in the space from June 1 to Aug. 28, surpassing Apple and Google, according to a report by Raymond James at the end of last month.