$SPWR call prices soar overnight

Option traders quadrupled their money only 24 hours after opening bullish positions in SunPower.

Just yesterday, Investitute’s proprietary programs flagged the purchase of 2,400 September $6.50 calls for $0.34 to $0.45 with shares at $6.80. These were clearly new positions, as open interest in the strike was only 405 contracts before the activity appeared.

Those calls sold for $1.40 this morning, 4 times their initial purchase price. The stock rose 15.6% at the same time, underscoring how quickly options can far outperform their underlying shares.

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.

SPWR jumped 5.3% to $7.95 today. Credit Suisse upgraded the solar-technology name to “outperform” from “neutral” and raised its price target to $10 from $8 after the California-based company said some of its products will be exempt from tariffs imposed in January.