Calls keep turning profits in $LI

Bullish option traders are once again turning big profits in upside positions opened in Chinese electric-car maker Li Auto (LI).

On Nov. 2, Market Rebellion’s Unusual Activity Service flagged the purchase of 2,000 November $22.50 calls for $0.52 as part of a bullish roll with shares at $22.72. This was clearly fresh buying, as open interest in the strike was only 1,341 contracts before that session began.

Those calls have traded up to $18.10 so far today, more than 34 times their purchase prices. The stock rose 78.61% in the same time, underscoring how options can far outpace gains in their underlying shares on a relative basis.

It makes the second the second winning trade posted by Market Rebellion in the name 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.

LI was last up 0.25% at $31.86, printing new all-time highs this session. The Chinese electric vehicle manufacturer topped revenue expectations during its quarterly report this morning.