Bulls catch a ride with $LYFT

Option traders doubled their money in Lyft (LYFT) this morning before shares pulled back.

On Oct. 17, Market Rebellion’s activity scanners showed that 4,000 Weekly $42 calls expiring tomorrow were bought for $1.91 as part of a bullish spread with shares at $40.91. This was clearly a new position, as open interest in the strike was only 657 contracts before that session began.

Those calls traded for as much as $3.75 today, about twice their purchase price. The stock rose 11.44% 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 jumped to $45.82 early this morning but has since fallen to $42.26 near midday trading, down 4.19% on the session. The ride-sharing service topped revenue expectations after the market closed yesterday.