Bulls double money fast in $PAGS

Upside calls bought in PagSeguro Digital (PAGS) yesterday morning are already paying off for option traders.

Just yesterday morning, Market Rebellion’s Unusual Activity Service found that 3,400 June $30 calls were bought for $0.44 to $0.55 with shares at $22.31. This was clearly fresh buying, as open interest in the strike was only 1,318 contracts before the activity appeared.

Those calls already traded for as much as $1.10 today, at least double their purchase prices. The stock rose 11.16% in the same time frame, a large move but nothing like that of its options 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.

PAGS ended the day to close up 7.17% at $24.65. The mobile payment operator, based in Brazil, will report earnings for its first quarter after the market closes on May 28.