$SPY calls continue to provide profits

Bullish option traders collected exponential profits in the SPDR S&P 500 Fund today as the index continued its rally off 52-Week lows.

On Dec. 26, Investitute’s market scanners found that 35,000 Weekly 11January $250 calls were bought from $1.60 to $1.75 with shares at $237.14. Volume was well above the strike’s open interest of 3,304 contracts, showing that it was a new position.

Those calls traded for as much as $6.24 today, more than triple their purchase price. The stock rose 5.93% at the same time, underscoring how quickly options can far outperform their underlying shares. They were the second winning trade in the SPY in as many days found by Investitute’s market scanners.

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.

SPY climbed to an intraday high of $251.40 before pulling back to close down 0.13% at $247.75 on the session. The exchange-traded fund, which tracks the benchmark S&P 500 index, made its first weekly positive close for the month as investors begin to allocate portfolios back into equities.