$ZNGA call prices soar 6-fold

Bullish option traders racked up exponential gains in Zynga today.

On March 27, Investitute’s tracking systems showed that 25,800 Weekly $5.50 calls expiring on May 3 were bought for $0.12 to $0.14 with shares at $5.23. This was clearly a new position, as open interest in the strike was a mere 80 contracts before the activity appeared.

Those calls traded for as much as $0.77 today, about 6 times their average purchase price. The stock rose 17.78% in the same time period, underscoring how 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.

ZNGA jumped 5.63% to $5.82 today. The social-game developer topped revenue expectations and raised its outlook after the market closed yesterday.