$VIX call prices rise

Bullish bets on the CBOE Volatility Index have turned huge gains today, rewarding option traders fast profits.

On Dec. 6, Market Rebellion’s Unusual Option Activity Service found the purchase of 128,101 22January 20 calls for $0.97 with the spot underlying at 13.06. There was an outstanding open interest of just 103,917 contracts before the trade, indicating that this was a new position.

Those calls have traded for as much as $1.84 today, an 89.69% return, while the underlying rose 49.08% in the same time period, underscoring how options can far outperform their underlying asset.

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 was last higher on the day by 22.68% to 19.47.