$ROKU bulls channel major gains

Option traders quintupled their money in Roku today.

On July 31, Investitute’s market scanners found that 2,000 Weekly $45 calls expiring tomorrow were purchased for $2.54 to $2.58 with shares at $44.07. Open interest in the strike was a mere 68 contracts before the trades occurred, showing that this was fresh buying.

Those calls sold for as much as $12.80 today, 5 times their purchase prices. The stock rose 31.22% 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.

ROKU spiked higher by 21.31% to $57.32 today. The TV-streaming service rallied after reporting an unexpected profit last night.