$BE calls power gains for bulls

Option traders are collecting big gains on bullish positions in Bloom Energy (BE) today.

Market Rebellion’s Unusual Option Activity Service flagged bullish option activity during two sessions last month in the same contract:

–On Sep. 18, 4,600 October $18 calls were purchased for $1.00 to $1.45 above open interest of 226 contracts with shares at $16.43.
–On Sep. 30, 4,900 more October $18 calls were purchased for $1.05 to $1.60 with shares at $18.27, appearing to add to the previous trade’s volume.

Those calls have traded for as much as $4.33 so far today, at least 2.5 times their purchase prices. The stock rose by as much as 34.81% in the same time period, illustrating how options can far outperform moves in their underlying shares on a relative basis.

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.

BE is up 13.52% to $22.17 during midday trade after making a new 52-Week high today of $22.32. The solid oxide fuel cell manufacturer will host a conference call and question and answer session on Oct. 8, tomorrow, regarding the decarbonization of the marine transport industry and the company’s role.