Bulls score fast profits in $GME

Option traders posted fast profits on upside positions in GameStop (GME) today.

On Dec. 27, Market Rebellion’s Unusual Activity Service found that 5,600 Weekly $6 calls expiring on Jan. 3 were bought for $0.06 to $0.10 with shares at $5.89. Volume was well above the strike’s open interest of 2,184 contracts, indicating that this was clearly fresh buying.

Those calls have traded for as much as $0.41 so far today, more than 6 times their initial purchase price. The stock rallied 8.49% at the same time, a huge 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.

GME is currently up 4.08% to $6.38 today. Shares have today retraced their gap lower following its quarterly earnings report on Dec. 10 where it missed top and bottom line expectations.