$CRON calls post quick gains

Option traders have more than doubled their money on bullish positions in Cronos (CRON).

On May 17, Investitute’s tracking systems found that 2,000 Weekly $18 calls expiring on June 28 were bought for $0.31 to $0.33 with shares at $14.89. Open interest in the strike was only 11 contracts before the activity appeared, showing that this was fresh buying.

Those calls sold for as much as $0.87 today, more than 2.5 times their purchase prices. The stock rose 19.21% in the same time period, underscoring how 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.

CRON reached a session high of $17.86 early this morning but pulled back with the rest of the market to $17.04 by late afternoon, down 2.04% on the day. The Toronto-based medical-marijuana company rallied after BofA/Merrill Lynch upgraded the name to “buy” from “underperform” on June 5 and raised its price target to $20 from $13.