$PINS bulls double their money

Option traders scored big profits today on upside positions in Pinterest (PINS) with shares at new highs.

On Aug. 21, Market Rebellion’s Unusual Activity tracking systems detected the fast purchase of 5,100 October $34 calls for $3.05 to $3.20 with shares at $33.96. Volume was well above the strike’s previous open interest of 62 contracts, showing that this was fresh interest.

Those calls traded for as much as $8.85 today, over 2.5 times their purchase prices. The stock rose 25.32% in the same time frame, showing how quickly 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.

PINS was last up 3.48% to $41.96 this morning. The social networking service printed a new all-time high of $42.56 today and is estimated to report earnings again on Oct. 29.