Bulls double money in $ACB

Option traders scored quick gains on upside positions in Aurora Cannabis today.

On Feb. 26, Investitute’s market scanners found that 3,100 Weekly $7 calls expiring on March 29 were bought for $0.90 to $1 with shares at $7.55. This was clearly fresh buying, as open interest in the strike was only 178 contracts before the activity appeared.

Those calls traded for as much as $2.23 today, more than twice their purchase prices. The stock rose 21.72% in the same time frame, illustrating how options can quickly 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.

ACB jumped 13.94% to $9.07 today. The medical-cannabis company announced this morning that it has hired hedge-fund manager Nelson Peltz as a strategic adviser.