$YELP calls quintuple in week

Bullish traders posted huge gains in Yelp before their options expired this afternoon.

On Sept. 17, Investitute’s market scanners identified the purchase of 2,300 September $46 calls for $0.95 to $1.08 with shares at $46.02. These were clearly new positions, as open interest in the strike was only 557 contracts before the activity appeared.

Those calls traded for $5.45 this morning, more than 5 times their purchase prices. The stock rose 11.86% in the same time frame, 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.

YELP reached $52.19 this morning before pulling back for the rest of the day to close at $49.94, down 4.13% on the session. The social-review network had rallied sharply since reporting second-quarter earnings in early August.