$SFLY call prices skyrocket eightfold

Bullish option traders pocketed enormous profits today as shares of Shutterfly soared.

On Jan. 9, Investitute’s market scanner identified the purchase of 1,500 March $55 calls in one print for $1.65 as part of a bullish spread with shares at $51.40. This was clearly a new position, as volume was well above the strike’s open interest of 1,003 contracts.

Those calls sold for $13.25 at the end of today’s session, 8 times their purchase price. The stock rallied 32.3% in the same time frame, a large move but nowhere near that of its options.

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.

SFLY surged 27.81% to $68.15 today. The photography-products retailer beat quarterly estimates and announced that it is buying school-photo company Lifetouch for $8.25 million yesterday afternoon.