$PAGS bulls double their money

Upside calls bought in PagSeguro Digital (PAGS) just over two months ago are paying off for option traders after its earnings report.

On Mar. 30, Market Rebellion’s Unusual Activity Service found that 3,000 June $45 calls were bought for $4.49 to $4.69 with shares at $44.54. This was clearly fresh buying, as there was no open interest in the strike before the activity appeared.

Those calls have traded for as much as $9.20 today, about double their purchase prices. The stock rose 21.58% in the same time frame, a large move but nothing like that of its options on a relative basis.

This is the second winning trade in the name posted on Market Rebellion in the last two weeks.

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.

PAGS was last up 5.92% at $53.92 after the mobile payment operator, based in Brazil, topped earnings expectations in its quarterly report after the close yesterday.