$TWTR call prices fly higher

Option traders are making exponential gains on a couple of bullish positions opened in Twitter (TWTR) this month.

Market Rebellion’s Unusual Option Activity Service flagged bullish option activity in the name earlier this month:

–On Oct. 15, 3,500 Weekly $45 calls expiring today, Oct. 23 were purchased for $1.19 to $1.25 above open interest of 478 contracts with shares at $44.88.

–Then on Oct. 20, 3,500 Weekly $46.50 calls expiring today, Oct. 23 were bought in one print for $0.54 above open interest of 3,235 contracts with shares at $45.65.

Those calls have traded for as much as $5.25 and $3.68 so far today, about 4 and 6 times their respective purchase prices. The stock rose by as much as 12.12% in the same time frame, 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.

TWTR is up marginally by 0.08% to $50.32 in late-session trade, near multi-year highs made earlier this week. The social-media company is scheduled to report earnings on Oct. 29 after the close.