$SPY option bulls score at highs

Bullish option traders are collecting big profits as the SPDR S&P 500 Fund (SPY) pops to new highs today.

On Jun. 30, Market Rebellion’s Unusual Activity programs detected the the purchase 5,822 September $429 calls for $10.13 as part of a bullish spread with shares at $428.02. Open interest in the contract before the trade occurred was just 2,016, showing that this was a new position.

Those calls traded for as much as $22.12 today, nearly twice their purchase price. The stock rose 5.11% in the same time frame, underscoring how options can far outperform moves in 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.

The SPDR S&P 500 Fund (SPY) is setting new highs today, last up 0.9% at $450.28.