$SPY call prices double in days

Timely trades made by bullish option traders racked up huge gains in the SPDR S&P 500 Fund today as the index rallied off 52-Week lows.

On Dec. 21, Investitute’s market scanners found that 11,000 January $259 calls were bought for $0.96 with shares at $240.18. Volume was well above the strike’s open interest of 4,483 contracts, showing that it was a new position.

Those calls traded for as much as $1.96 today, more than double their purchase price. The stock rose 2.67% at the same time, underscoring 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.

SPY was up 5.05% to $246.18 today. The exchange-traded fund, which tracks the benchmark S&P 500 index, closed higher than its previous day’s close for the first time in nine sessions.