$CGC call prices triple in hours

Option traders who opened bullish positions in Canopy Growth this morning were logging exponential gains after lunchtime.

Just after today’s opening bell, Investitute’s market scanners found that 2,000 Weekly $40 calls expiring this Friday were purchased for $0.90 to $1.45 above open interest of 581 contracts. Stock 37.89.

Those calls rose to $3.50 by early afternoon, 3 times their average purchase price, with volume topping 10,400 by the end of the day. The stock rose 11.51% at the same time, showing how quickly options can far outperform their underlying shares.

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.

CGC rose to $42.38 today before pulling back to close at $41.01, down 1.42% on the session. The cannabis company rallied after receiving a $4 billion investment from Constellation Brands in August but pulled back with the broader market in recent days.