$SPY calls turn 5-fold

Bullish option traders collected exponential profits in the SPDR S&P 500 Fund (SPY) today as the index made a new all-time-high.

On June. 5, Investitute’s market scanners found that 16,000 Weekly 05July $290 calls were bought for $1.17 with shares at $281.95. Volume was well above the strike’s open interest of 723 contracts, showing that it was a new position.

Those calls traded for as much as $6.73 this afternoon, nearly 6 times their purchase price. The stock rose 5.08% at the same time, underscoring how quickly options can far outperform their underlying shares. They were the second winning trade in the SPY in as many days found by Investitute’s market scanners.

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 climbed to a new all-time-high of $296.30 today before pulling back to close at $295.86, itself a new closing-basis high, up 0.96% on the session. The exchange-traded fund, which tracks the benchmark S&P 500 index, is currently up about 7% over the course of the past year.