$CAR bulls in the driver’s seat

Option traders tripled their money on upside positions in Avis Budget (CAR) today.

On Oct. 13, Market Rebellion’s Unusual Activity Scanners found that 2,100 November $32 calls were bought for $2.00 to $2.15 with shares at $29.59. This was clearly fresh buying, as open interest in the strike was only 923 contracts before that session began.

Those calls have traded for as much as $6.30 so far today, about 3 times their purchase prices. The stock rose 24.4% 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.

CAR was last up by 11.6% to $36.94 today. The auto-rental giant is set to announce earnings on Oct. 29.