Call prices rise in $GDS

Bullish option traders nearly tripled their money for the second time this month in GDS Holdings (GDS) today.

On May 20, Market Rebellion’s Unusual Activity Service detected the purchase of 2,100 September $60 calls for $7.20 to $7.80 with shares at $60.99. This was clearly fresh buying, as open interest in the contract before that session began was a mere 266.

Those calls traded for $22.25 today, nearly 3 times their purchase prices. The stock rose 31.78% in the same time, a large move but nowhere near that of its options.

It marks the second winning trade in the name 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.

GDS closed higher by 3.27% to $80.56 today, just off of its new high of $81.83 made earlier in the session. The Chinese IT service management company announced yesterday morning that two of its long term investors agreed to purchase $505 million of new Class A stock, at a value of $65 per ADS (American Depositary Receipt).