$VMW calls log large gains in hours

Bullish option traders scored sizable profits in VMware during today’s session.

Early in the afternoon, Investitute’s proprietary programs found that 1,650 Weekly $155 calls expiring on Sept. 14 were purchased for $1.20 to $2.20 with shares at $153.84. These was clearly fresh buying, as open interest in the strike was only 248 contracts before the activity appeared.

Those calls traded up to $3.68 just 90 minutes later, 3 times their initial purchase price. The stock rose just 1.54% in the same time, showing 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.

VMW reached a session high of $156.72 before pulling back in the last hour to close at $154.66, still up 2.81%. The cloud-technology company declined despite beating earnings and revenue estimates last week, but shares rose steadily for most of today’s session even as the broader market fell sharply.