$SNAP pays off again for bulls

Option traders racked up exponential profits overnight on bullish positions in Snap.

Yesterday Investitute’s market scanners flagged bullish activity in several short-term strikes with shares around $10.97, including two contracts that expired this afternoon:

–9,000 March $11 calls were bought for $0.07 to $0.18 above open interest of 7,870 contracts. Those calls traded up to $0.67 this morning, more than 5 times their average purchase price.
–4,600 March $11.50 calls were bought for $0.03 and $0.04 above open interest of 713 contracts. Those options sold for as much as $0.24 today, at least 6 times their purchase prices.

The stock rose 6.29% at the same time, underscoring how quickly options can far outpace gains in their underlying shares. It is the second winning trade in the name posted on Investitute in as many days.

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.

SNAP jumped to $11.67 this morning before pulling back to close at $11.16, off 1.06% on the session. On CNBC’s “Halftime Report” yesterday, Investitute co-founder Jon Najarian cited  the bullish option activity in the social-networking name following upgrades from BTIG and Jefferies.