$PSTG call buyers rack up gains

Bullish option traders turned large profits today as Pure Storage hit record highs.

On July 31, Investitute’s proprietary programs flagged the purchase of 2,750 September $22.50 calls for $1.35 to $1.40 with shares at $21.70. Open interest in the strike was only 205 contracts before that session began, showing that this was fresh buying.

Those calls sold for $3.90 this morning, about triple their purchase prices. The stock rose 21% at the same time, illustrating how 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.

PSTG surged 14.27% today to close at $25.15 after reaching an all-time high of $26.30 earlier in the session. The data-storage company topped earnings and revenue estimates after the market closed yesterday.