Call prices triple in $GDS

Bullish option traders have more than tripled their money in GDS Holdings (GDS).

On Apr. 17, Market Rebellion’s Unusual Activity Service detected the purchase of 2,500 June $65 calls, expiring tomorrow, for $2.22 to $2.42 as part of a bullish spread and roll with shares at $58.08. This was clearly fresh buying, as open interest in the contract before that session began was a mere 640.

Those calls traded for as much as $9.00 today, more than 3 times their purchase prices. The stock rose 27.17% in the same time, a large move but nowhere near that of its options.

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.

GDS closed higher by 2.95% to $72.94 today, just off of its 52-week high of $75.33 made earlier in the session. The Chinese IT service management company’s shares were initiated with a Buy and $86.34 price target at Jefferies on Tuesday this week.