Bulls book profits with $LYFT

Option traders booked a ride to profits in Lyft (LYFT) today as shares spiked higher.

On Aug. 4, Market Rebellion’s Unusual Activity scanners showed that 10,800 Weekly $31 calls expiring tomorrow, Aug. 7, were bought for $0.28 to $0.52 with shares at $30.21. This was clearly a new position, as open interest in the strike was only 5,433 contracts before that session began.

Those calls traded for as much as $2.10 today, at least 4 times their purchase prices. The stock rose 8.47% in the same time frame, showing how 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.

LYFT closed up 4.69% at $32.34 today. The ride-sharing service is scheduled to report quarterly earnings results on Aug. 12 after the closing bell.