$STX bulls post profits

Patient traders cashed in mammoth profits in Seagate Technology (STX) today.

On Dec. 3, Market Rebellion’s UOA service flagged the purchase of 3,000 June $75 calls for $1.67 with shares at $62.74. This was fresh buying as the volume was well over the previous open interest of 32 contracts.

Those calls traded for as much as $10.17 today, more than 6 times their purchase price. The stock rose 33.17% in the same time frame, showing how 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.

STX jumped 1.78% to $83.88 today, just shy of its new high made earlier in the session of $83.96. The digital-storage company’s price target was raised at Loop Capital this morning, to $100 from $90.