$SE call prices soar 8-fold

Sea Limited surged on strong quarterly results today, handing exponential gains to bullish option traders.

On Jan. 15, Investitute’s tracking systems detected the purchase of 5,000 May $15 calls for $0.82 to $0.85 as part of a bullish spread with shares at $12.12. Open interest in the strike was a mere 74 contracts before the trade occurred, showing that this was a new position.

Those calls sold for $7.10 just before today’s closing bell, more than 8 times their purchase prices. The stock rocketed 79.62% in the same time period, a huge gain but still nowhere near that of its options on a relative basis.

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.

SE spiked higher by 34.94% to $21.86 yesterday. today. The Singapore-based digital entertainment, e-commerce, and financial-services company rallied after reporting earnings last night.