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$BB bulls triple money on earnings
BlackBerry surged on a strong earnings report today, yielding large returns on upside option positions opened at the beginning of the week. On Mar. 25, Investitute’s market scanners identified the purchase of 3,000 Weekly $9 calls expiring on 05April for $0.33 to $0.39 with shares at $8.85. This was clearly fresh buying, as volume was […]
BlackBerry surged on a strong earnings report today, yielding large returns on upside option positions opened at the beginning of the week.
On Mar. 25, Investitute’s market scanners identified the purchase of 3,000 Weekly $9 calls expiring on 05April for $0.33 to $0.39 with shares at $8.85. This was clearly fresh buying, as volume was well above the strike’s open interest of 805 contracts.
Those 05April $9 calls traded up to $1.30 today, more than 3 times their purchase prices. The stock rose 19.53% at the same time, showing how options can quickly outperform their underlying shares by a wide margin.
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.
BB spiked to close up 13.63% on the session at $10.09. The communications-software company surpassed quarterly estimates on the top and bottom lines before the market opened today.