Traders win both ways in $EA

Option traders just scored big gains with downside positions in Electronic Arts last week, and today they turned profits as the stock rebounded.

On Dec. 3, Investitute’s proprietary programs flagged the purchase of 2,250 March $90 calls for $4.85 with shares at $87.81. This was clearly a new position, as volume was well above the strike’s open interest of 1,615 contracts before that session began.

Those calls traded for as much as $16.77 this morning, about 3.5 times their purchase price. The stock rose 20.05% in the same time period, illustrating 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.

EA jumped 5.23% to $102.33 today. The game developer said last night that the number of players of its “Apex Legends” battle-royale title has exceeded 25 million.