$TRIP call prices soar fivefold

Bullish option traders posted exponential gains in TripAdvisor today.

On May 1, Investitute’s market scanners found that 1,500 Weekly $37 calls expiring this Friday were purchased for $1.90 as part of a bullish spread with shares at $37.12. Open interest in the strike was only 85 contracts before the trade occurred, showing that this was a new position.

Those calls traded for $10.71 today, more than 5.5 times their purchase price. The stock rose 28.6% in the same time frame, a large move but nowhere near that of its 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.

TRIP spiked higher by 22.8% today to close at $47.62. The travel-review service beat earnings estimates and reported strong user growth after the market closed yesterday.