$ZNGA calls turn quick gains

Bullish option traders doubled their money in Zynga today, thanks to strong quarterly results.

On Nov. 1, Investitute’s proprietary programs flagged the purchase of 25,100 June $4 calls for $0.37 to $0.41 with shares at $3.66. This was clearly fresh buying, as open interest in the strike was a mere 10 contracts before that session began.

Those calls sold for as much as $0.99 today, more than 2.5 times their average purchase price. The stock rallied 30.6% in the same time period, a large gain but nowhere near that of its options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

ZNGA, which reached a 52-week high of $4.86 this morning, ended the session up 5.1% to $4.74. The social-game developer beat quarterly estimates on the top and bottom lines after the market closed yesterday.