$V bulls double their money overnight

Visa bulls scored big today on short-dated upside calls bought with the underlying equity near a three-month low.

Just yesterday, Investitute’s market scanners identified the purchase of 3,000 Weekly $140 calls expiring on November 2 for $1.79 with shares at $133.81. Open interest in the strike was only 281 contracts before the trade occurred, showing that it was clearly a new position.

Those calls traded for as much as $4.55 during today’s session, more than double their purchase price. The stock rose 5.27% in the same time period, illustrating how quickly options can far outperform moves 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.

V was up 4.73%, to close at $140.05 on the day. The electronic fund transfer company’s shares rebounded sharply, with the rest of the market, after Visa tested rising support yesterday which has been in place since late 2016.