Bulls acquire gains in $PS

Bullish option positions in Pluralsight (PS) are yielding large returns today.

On Nov. 12, Market Rebellion’s Unusual Activity Service detected the purchase of 4,000 December $17.50 calls for $0.35 to $0.75 with shares at $15.38. Open interest in the strike was only 3,253 contracts before the trade occurred, showing that this was a new position.

Those calls are traded for as much as $2.70 this session, better  than 9 times their purchase prices. The stock rose 31.4% in the same time period, illustrating the kind of leverage that can be achieved with options.

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.

PS was up 6.4% to close at $20.20 this afternoon. The cloud tools and education platform is to be acquired by Vista for $20.26 per share in cash.