$TWTR call prices skyrocket 27-fold

Option traders posted astronomical profits on bullish positions opened in Twitter just after Labor Day.

Way back on Sept. 6, Investitute’s tracking systems detected the purchase of 13,445 March $25 calls for $0.37 as part of a bullish roll with shares at $16.63. This was clearly a new position, as volume was far above the strike’s open interest of 1,692 contracts.

Those calls traded for $10.05 today, 27 times their purchase price. The stock doubled in the same time period but still vastly underperformed its options on a relative basis.

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.

TWTR jumped 12.15% to $30.18 today. The social-media company topped quarterly expectations and reported strong user growth this morning.