Bulls qualify for fast gains with $RKT

Rocket (RKT) has rallied sharply today, qualifying bullish option traders exponential gains on positions opened only yesterday.

Just yesterday on May 26, Market Rebellion’s Unusual Activity Service found that 12,000 Weekly $17.50 calls, expiring this Friday, May 28, were bought for $0.12 to $0.36 with shares at $17.02. This was clearly fresh buying, as open interest in the strike was just 7,163 contracts before the activity appeared.

Those calls have traded up to $1.27 so far today, at least 3.5 times their purchase prices. The stock rallied 9.4% in the same time period, a large move but nowhere near 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.

RKT was last at $18.49 this afternoon, up 5.9% on the day.