$VIAV calls double overnight

Option traders turned quick profits today on bullish positions opened in Viavi Solutions just 24 hours earlier.

Just yesterday, Investitute’s market scanners identified the purchase of 5,000 May $10 calls at the same time for $0.15 with shares at $9.18. This was clearly a new position, as volume was far above the strike’s open interest of 1,750 contracts.

Those calls traded for $0.36 today, about 2.5 times their purchase price. The stock rose 10.6% at the same time, showing how quickly options can outpace gains 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.

VIAV jumped 4.45% to $9.86 today. The communications-testing company blew past earnings and revenue estimates last night, prompting analysts to raise their price targets on the name.