Traders double money in $PYPL

Bullish option positions have scored big profits as PayPal has rallied back near record highs.

On Aug. 1, Investitute’s tracking systems detected the purchase of 5,300 October $87.50 calls for $2.18 to $2.84 with shares at $83.77. Volume was far above the strike’s open interest of 2,442 contracts, showing that this was fresh buying. Investitute’s co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for $5.56 this afternoon, twice their purchase prices. The stock rose 8.39% in the same time period, illustrating the kind of leverage that can be achieved 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.

PYPL was up 0.71% to $90.61 today. The October calls were purchased just before the electronic-payment service began a sharp rebound that has taken it back near all-time highs from late July.