$ZEN bulls triple their money

Option traders collected huge profits in Zendesk today.

Back on March 29, Investitute’s proprietary programs flagged the purchase of 2,500 October $60 calls for $2.55 to $2.81 with shares at $48.33. This was clearly fresh buying, as open interest in the strike was only 305 contracts before the activity appeared.

Those calls sold for $9.54 this morning, more than 3 times their purchase prices. The stock soared 42.1% in the same time period, a huge gain but one that was still far below that of its options on a relative basis.

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.

ZEN rose to $69.98 this morning before pulling back to close at $67.64, down 2.25% on the session. Jefferies initiated the business-software developer with a “buy” rating and an $82 price target after the market closed yesterday.