$WDC calls skyrocket 14-fold

Bullish option traders racked up enormous gains overnight in Western Digital (WDC).

Just yesterday, Our market scanners found that 4,000 Weekly $57.50 calls expiring this Friday were bought for $0.25 to $0.39 with shares at $56.68. This was clearly fresh buying, as open interest in the strike was only 341 contracts before that session began.

Those calls traded for as much as $4.15 today, 13 times their average purchase price. The stock rose 7.87% at 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.

WDC reached a 52-week high of $61.33 this morning before pulling back to $59.94 this afternoon, still up 4.3% on the session. Mizuho raised its price target for the data-storage company to $64 from $61 this morning.