$PLAN calls deliver fast profits for bulls

Option traders have logged large gains on upside positions in Anaplan (PLAN) today, following acquisition news.

On Friday Mar. 18, Market Rebellion’s Unusual Activity Service found that 5,000 May $50 calls were bought for $3.70 with shares at $48.14. This was clearly fresh buying, as open interest in the strike was just 478 contracts before the activity appeared.

Those calls traded up to $15.95 today, twice their purchase price. The stock rose 34.63% in the same time period, 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.

PLAN was last up 27.57% to $64.54 in afternoon trade.