Bulls triple money in $RACE

A long-term position in Ferrari is paying off big for upside option traders.

On Jan. 30, Investitute’s tracking systems detected the purchase of 2,600 January 2020 $140 calls for $4.80 to $5 with shares at $112.47. Open interest in the strike was a mere 16 contracts before that session began, showing that this was fresh buying.

Those calls traded for $14.10 today, about 3 times their average purchase price. The stock rose 25.4% in the same time period, a large move but nowhere near that of its options.

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.

RACE was up 0.09% to $141.16 today. The racing icon surpassed earnings and revenue expectations on May 7.