$ROKU streams large profits

Option traders are reaping big gains today from bullish positions on Roku (ROKU).

On March 6, Investitute’s tracking systems identified the purchase of 9,985 October $55 calls for $23.40 above open interest of 109 contracts as part of a bullish roll with shares at $72.25. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for as much as $40.09 today, more than 71.3% higher than their purchase price. 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.

ROKU was up 3.34% to $91.80 today. Needham raised its price target on the TV-streaming company to $120 from $85 this morning, the highest on Wall Street, while maintaining a “buy” rating.