Call prices rise in $GM

Option traders are driving big profits on upside positions opened in General Motors (GM) less than two weeks ago.

On Sep. 23, Market Rebellion’s Unusual Activity Service found that 13,000 October $53 calls, expiring next Friday, were bought for $1.00 to $1.12 above the existing open interest of 3,982 contracts with shares at $51.45.

Those calls traded up to $3.40 this morning, about triple their purchase prices. The stock rose 8.09% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

GM was last higher this session by 1.47% at $53.91.