Call prices spike in $SNAP

Upside option positions opened in Snap (SNAP) at the beginning of the month are paying big gains today.

On Jun. 1, Market Rebellion’s Unusual Activity Scanners found that 13,000 June $19.50 calls were bought for $0.96 and $0.97 as part of a bullish roll with shares at $19.46. This was clearly fresh buying, as open interest in the strike was only 1,052  contracts before that session began.

Those calls have traded for as much as $2.24 today, more than double their purchase prices. The stock rose 11.46% in the same time frame, a large move but nowhere near 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.

SNAP this session was last up 3.54% to $21.64, just shy of its new 52-Week high ($21.75) made earlier today. The social-media company’s price target was raised to $25 from $17 yesterday morning at UBS.