$SQ calls triple overnight

It took just over 24 hours for bullish option traders to run up exponential gains in Square (SQ).

Early yesterday, Market Rebellion’s tracking systems found that 4,500 Weekly $73 calls expiring this Friday, Jan. 31, were bought for $0.63 to $1.60 with shares at $72.98. This was clearly fresh buying, as open interest in the strike was only 2,435  contracts before the activity appeared.

Those calls have traded for as much as $4.00 this afternoon, 3.5 times their average purchase price. The stock rose 5.41% 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 is up 2.81% to $76.91 heading into the closing bell today. The electronic-payment service is scheduled to report earnings after the market closes on Feb. 26.