$SNAP bulls make fast money

Upside option positions opened in Snap (SNAP) just last week are already paying exponential gains today.

On Dec. 26, Market Rebellion’s activity scanners found that 10,000 Weekly $16 calls expiring on Jan. 10 were bought for $0.39 to $0.42 with shares at $15.77. This was clearly fresh buying, as open interest in the strike was only 7,024 contracts before that session began. Market Rebellion co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for as much as $1.19 today, more than 2.5 times their purchase prices. The stock rose 8.43% in the same time frame, a large move but 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.

SNAP is up 0.98% to $16.94 this afternoon. The social-media company was reported by TechCrunch to have acquired AI Factory, a computer vision startup.