$SMH call prices triple in a week

Option traders tripled their money in bullish positions on the VanEck Vectors Semiconductor Fund today.

On Jan. 17, Investitute’s market scanners found that 8,250 February 92 calls were bought mostly in one print of 6,500 from $1.70 to $2.24 with shares at $89.38. Volume was well above the strike’s open interest of 2,516 contracts, showing that this was clearly a new position.

Those calls traded for $6.04 today, 3 times their average purchase price. The stock rallied 8.4% in the same time period, a huge move 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.

SMH was up 1.86% to close at $96.89 today. The exchange-traded fund has seen several of its components report earnings this week, conducting share prices higher.