Bulls keep watching big gains in $DISCK

Discovery Communications (DISCK) has continued its upside momentum, delivering big gains to upside option traders.

On Jan. 27, Market Rebellion’s Unusual Activity Service found that 3,000 March $27.50 calls were bought for $2.40 as part of a bullish spread with shares at $34.57. This was clearly fresh buying, as open interest in the strike was only 42 contracts before the activity appeared.

Those calls were last marked for $20.60, about 8.5 times their purchase price. The stock rose 40.3% in the same time frame, showing how quickly options can far outperform moves in their underlying shares on a relative basis.

This marks the second winning trade in the name to be posted on Market Rebellion this month.

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.

DISCK was last up by 7.78% to $48.50 this afternoon. The media company has continued to trade higher following its most recent earnings report delivered Feb. 22.