$VIX call prices rip higher

Bullish bets on the CBOE Volatility Index have ripped higher today, turning big gains for option traders for the third time in about a month.

On Feb. 18, Market Rebellion’s Unusual Avtivity tracking systems cited the purchase of 150,000 18March 24 calls for $0.45 to $0.49 with the underlying at 14.72.

Those calls traded for as much as $3.90 today, more than 8 times their average purchase price. The underlying rose 141.1% in the same time period, underscoring how options can far outperform their underlying asset.

It is the third winning trade in the CBOE Volatility Index to be posted on Market Rebellion in recent weeks.

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.

The VIX spiked higher today to a mid-session high of 36.36 but has since edged lower, last up by 17.67% to 32.43. The index, which does not have a dollar value and trades inversely to the S&P 500, has spiked as equities decline.