$PLAN calls lead to profits for bulls

Option traders have logged large gains on upside positions in Anaplan (PLAN).

On Apr. 6, Market Rebellion’s Unusual Activity Service flagged the purchase of 4,000 May $60 calls for $2.90 as part of a complex bullish spread with shares at $57.06. Open interest in the strike was only 851 contracts before the trade occurred, showing that this was a new position.

Those calls traded up to $5.80 today, twice their purchase price. The stock rose 12.64% 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 up 3.61% to $64.25 at the close. The cloud-technology company was initiated with an Overweight rating and $72 price target at Wolfe Research on Thursday.