$SNAP bulls score big profits

Bullish option traders are cashing in exponential profits on Snap (SNAP) calls today.

On Mar. 31, Market Rebellion’s Unusual Options Activity service found that 6,400 Weekly $53 calls, expiring this Friday, Apr. 9, were bought for $1.23 to $1.55 with shares at $50.87. This was clearly fresh buying, as open interest in the strike was only 1,770 contracts before that session began.

Those calls have traded for as much as $8.10 so far today, at least 5 times their purchase prices. The stock rose 20.01% 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 was last up 5.62% to $60.11. The social media company was upgraded to Overweight from Neutral at Atlantic Equities yesterday.