$SNE call prices quadruple

Option traders collected huge profits in Sony today on bullish positions opened less than a month ago.

On Aug. 18, Investitute’s market scanners identified the purchase of 5,000 September $55 calls for $1.15, as part of a bullish roll, with shares at $54.10. This was clearly a new position, as open interest in the strike was only 1,696 contracts before the session began. Investitute co-founder Jon Najarian cited the unusual activity on CNBC’s “Halftime Report” shortly after.

Those calls traded for as much as $4.56 today, nearly 4 times their purchase prices. The stock rose 9.93% 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.

SNE was up 2.91% to $59.44 today. The Japanese conglomerate was upgraded by Credit Suisse to Outperform on Monday.