$SNAP bulls double their money

Shares of Snap (SNAP) popped this morning on positive analyst comments, turning large profits on upside option positions.

On June 10, Investitute’s tracking systems detected the purchase of 5,000 Weekly $14 calls expiring on July 26 for $1.12 and $1.13 with shares at $13.98. Open interest in the strike was only 514 contracts before the trade occurred, showing that this was a new position. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for as much as $2.35 today, more than twice their purchase prices. The stock rose 15.45% in the same time period, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

SNAP hit a 52-week high of $16.23 this morning before pulling back to $15.67 heading into the close, still up 0.64% on the session. Goldman Sachs upgraded the social-media company to “buy” from “neutral” this morning and raised its price target to $18 from $13.