$V call buyers rack up big profits

Bullish option traders have doubled their money in Visa.

On Oct. 30, Investitute’s tracking systems detected the purchase of 5,000 December $135 calls for $3.73 as part of a bullish spread with shares at $130.92. This was clearly a new position, as volume was well above the strike’s open interest of 1,615 contracts before that session began.

Those calls traded for as much as $8.90 this morning, more than twice their purchase price. The stock rose 7.69% in the same time frame, underscoring how quickly options can far outperform their underlying shares. Investitute co-founder Jon Najarian also cited heavy buying in the December $145 calls on CNBC’s “Halftime Report” yesterday.

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 ended today’s session unchanged at $139.72.