Bulls call in $SOXS chips

Chip bears are seeing their bets be rewarded today in upside call positions on the Direxion Daily Semiconductor Bear 3X Shares Fund (SOXS).

On Feb. 25, Market Rebellion’s Unusual Option Activity Service identified the purchase of 13,400 March $16 calls for $0.50 to $0.65 with shares at $11.79. This represented fresh buying, as volume was well above the strike’s previous open interest of 309 contracts.

Those calls were traded for as much as $1.65 today, about 3 times their purchase price. The stock rose 32.65% in the same time period, underscoring 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.

SOXS was last up 3.94% today at $15.29. The exchange-traded fund offers 3x daily short leverage to the PHLX Semiconductor Index,