Options traders more than doubled their money on long-dated upside positions opened in Twilio Inc. (TWLO) - Get Report

On August 3, Investitute's tracking systems detected the purchase of 5,000 January $70 calls, expiring on January 18, for $5.70 as part of a bullish spread with shares at $61.29. This was clearly a new position, as volume was well above the strike's open interest of 1,529 contracts. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC's "Halftime Report."

These investors likely purchased those calls, with a six-month horizon, to capture TWLO's next two earnings reports, expecting the shares to appreciate handsomely during that time.

Those January $70 calls traded for $14 Tuesday morning, about 2.5 times their purchase price. The stock rose 26.1% in the same time frame, a large move but still far below that of its options on a relative basis. Now those investors own in-the-money calls which will move more in parity with the underlying shares. They may choose to sell half of their position, letting the remaining calls ride through the next earnings cycle on 'house money,' or perhaps even roll-up the calls to position themselves for greater upside leverage. Come to watch the action at Investitute.

Twilio surged 18.7% to $75.10 on August 7. The cloud-communications company reported a surprise profit and surpassed revenue expectations after the market closed Monday, August 6.

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.

Contributed by Investitute. TheStreet has an affiliate partnership with Investitute.