$TWTR calls turn quick gains

Option traders doubled their money overnight in upside positions targeting Twitter.

Just yesterday, Investitute’s market scanners identified the purchase of 21,000 Weekly $40 calls expiring on 03May for $0.27 to $0.55 with shares at $38.81. This was clearly fresh buying, as open interest before those trades occurred was a just 8,445 contracts.

Those calls traded up to $1.19 today, well over twice their average purchase price. The stock rose 5.41% in the same time frame, showing the kind of leverage that can be achieved quickly 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 was up 0.28% to $39.91 today after making a new year-to-date high of $40.52 earlier in the session. The social-media stock disclosed its quarterly earnings report the morning of April 23 and has attracted upgrades from analysts, including a price target raise by Guggenheim to $44 from $41.