$ZM bulls double their money overnight

Option traders made fast profits, doubling their money on upside positions in Zoom Video Communications (ZM) overnight.

Yesterday on Apr. 23, our proprietary programs found that 6,000 Weekly $170 calls expiring next Friday, May 1, were bought for $4.20 to $8.40 above open interest of 2,564 contracts with shares at $157.40.

Those calls traded for more than $18.00 minutes after the opening bell today, at least twice their purchase prices. The stock rose 14.75% in the same time frame, showing how quickly options can far outperform moves in their underlying shares 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.

ZM gapped higher this morning to $181.50, a new lifetime high, after an announcement that it would replace Willis Tower Watson (WLTW) in the Nasdaq-100 on Apr. 30 but traded sharply lower in the afternoon session to end at $158.80, down 6.09% after Facebook (FB) unveiled a new video call feature.