$SQ calls double overnight

Option traders have run up fast profits overnight in Square (SQ) calls.

On May 25, Market Rebellion’s Unusual Activity Service found that 3,900 Weekly $210 calls, expiring next Friday, Jun. 4, were bought for $4.28 to $4.80 with shares at $205.14. This was clearly fresh buying, as open interest in the strike was just 583 contracts before the activity appeared.

Those calls traded up to $12.20 today, over 2.5 times their purchase prices. The stock rose 6.8% in the same time period, illustrating the kind of leverage that can be achieved quickly 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.

SQ was up 2.52% to close at $216.20 today. The electronic-payment service was reported on by Bloomberg yesterday to have plans to offer checking and savings accounts.