$CGC calls rip higher overnight

It took just one overnight session for bullish option traders to rack up huge gains in Canopy Growth (CGC).

On Nov. 20, Market Rebellion’s Unusual Option Activity Service identified the purchase of 2,100 Weekly $17.50 calls expiring on Nov. 22 for $0.35 to $0.92 with shares at $16.87. This represented fresh buying, as volume was well above the strike’s previous open interest of 1,250 contracts.

Those calls have traded for as much as $2.80 this morning, more than 4 times their average purchase price. The stock rose 19.86% in the same time frame, showing 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.

CGC is currently up 14.34% to $20.17. The Canadian cannabis company has rallied this week while the MORE (Marijuana Opportunity Reinvestment and Engagement) Act is considered by Congress, having been approved by the House Judiciary Committee yesterday morning in a 24-10 vote.