$AVGO call buyers score big profits

Option traders have are scoring big profits in upside positions opened on Broadcom (AVGO) three weeks ago.

On May 24, Market Rebellion’s Unusual Option Activity Service found that 2,000 June $1,450 calls were bought for $40.93 to $42.90 with shares at $1,412.09. This was clearly fresh buying, as open interest in the contract was just 653 before the activity appeared.

Those calls have traded for as much as $285.00 today, a 564.34% return, while the stock rose 22.78% at the same time, showing how options can far outperform their underlying shares.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

AVGO was last higher by 12.38% to $1,680.62 in afternoon trading.