$SPOT bulls listen to big profits

Option traders are hearing the register ring today from upside positions opened in Spotify (SPOT) only one week ago.

On Jun. 10, Market Rebellion’s Unusual Activity Scanners identified the purchase of 3,400 June $230 calls for $0.65 to $1.10 with shares at $194.75. This was clearly fresh buying, as volume was far above the strike’s open interest of 291 contracts before the trades occurred.

Those calls have traded for as much as $5.30 so far today, better than 5 times their purchase prices. The stock rose 17.57% in the same time frame, 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.

SPOT was last up 13.15% to $226.10. Since yesterday’s close the company has reportedly reached podcast deals with both Kim Kardashian West and Warner Bros.