Bulls rack up quick profits in $DVMT

Dell Technologies Class V ‘tracking’ shares spiked higher on positive stock convergence developments today, yielding large gains on option positions opened just two sessions earlier.

Just last Thursday, Investitute’s tracking systems detected the purchase of 2,000 August $95 calls bought for $1.75 with shares at $84.44. This was clearly a new position, as open interest in the strike was only 241 contracts before the trade occurred..

Those calls traded for $5.10 today, nearly 3 times their purchase price. The stock rose 11.3% in the same time frame, showing how quickly options can outpace gains in 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.

DVMT jumped 9% to $92.20 today. The technology conglomerate’s tracking shares jumped after news that Dell Technologies would reenter the public markets via its Class C stock, which investors of Dell Technologies Class V tracking stock (DVMT) would receive in an equity-cash combination valued at $109 per share.