$PAYX call prices double in hours

Option traders who opened bullish positions in Paychex (PAYX) this morning were posting large gains by the afternoon.

Barely 10 minutes after the opening bell, Investitute’s market scanners identified the purchase of 3,300 July $85 calls for $0.65 to $1 above open interest of 1,201 contracts with shares at $84.28. Investitute co-founder Pete Najarian cited the unusual activity on CNBC’s “Halftime Report” today.

Those calls traded up to $1.60 by early afternoon, about twice their average purchase price. The stock rose 1.12% at the same time, illustrating the kind of leverage that can be achieved with 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.

PAYX was up 0.84% to $85.31 today. The payroll-services company pulled back after reporting mixed quarterly results last week but has since rebounded.