Traders win both ways in $PYPL

Option traders cashed in on bearish positions in PayPal (PYPL) early this week, and now they are winning in bullish plays opened since then.

On June 4, Investitute’s tracking systems found that 5,900 Weekly $112 calls expiring on July 5 were bought for $1.60 to $1.82 with shares at $107.27. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls sold for as much as $3.50 today, twice their average purchase price. The stock rose 4.04% in the same time frame, showing how quickly options can far outpace gains in 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.

PYPL is up 0.16% to $119.95 in afternoon trading. The digital-payment system has rebounded since shares dropped on June 3, when option traders notched a quick win on the downside.