$VG option bulls triple money

Option traders are scoring big profits today on upside positions opened in Vonage Holdings Corp. (VG).

Way back on Mar. 4, Market Rebellion’s Unusual Activity Service found that 8,700 January $15 calls were bought for $1.75 to $1.95 above the existing open interest of 5,684 contracts with shares at $12.72.

Those calls traded for as much as $5.70 today, about 3 times their average purchase price. The stock rose 61.95% at the same time, underscoring how quickly options can far outperform 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.

VG was last up on the day by 25.81% to $20.60.