$SPOT calls double bulls’ money quickly

Option traders have already doubled their money on upside positions opened in Spotify only one session ago.

On Jan. 11, Investitute’s market scanners identified the purchase of 1,500 January $124 calls for $2.20 as part of a bullish spread, rolled from an existing in-the-money trade, with shares at $120.25. This was clearly fresh buying, as volume was far above the strike’s open interest of 40 contracts before the trades occurred.

Those calls sold for $5.10 this morning, better than twice their initial purchase price. The stock rose 5.15% 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 up 5.14% to $126.71 today. The company announced a content agreement with India’s T-Series this morning, ranging from Bollywood soundtracks to non-film artist songs.