Traders triple their money in $VXX

This week’s market volatility resulted in big profits for option traders who opened upside positions in the iPath S&P 500 VIX Short-Term Futures Note only a few days ago.

On Oct. 9, Investitute’s tracking systems flagged the purchase of 31,210 December $35 calls for $2.50 as part of a bullish spread with shares at $28.56. This was clearly a new position, as volume was far above the strike’s open interest of 5,997 contracts at the beginning of that session.

Those calls traded for $7 today, nearly 3 times their purchase price. The stock rose 30.22% in the same time frame, a large move but nowhere near that of their options.

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.

VXX surged to $38.69 as the market sold off yesterday but ended today’s session down 7.73% to $34.02 after equities rebounded. The exchange-traded note, which reflects volatility in the S&P 500, usually trades inversely to stocks.