$CSIQ bulls soak up some gains

Short term bullish option positions paid off today as Canadian Solar (CSIQ) quickly heated up.

Just this morning, Market Rebellion’s Unusual Activity Scanners found that 2,500 Weekly $42.50 calls expiring this Friday, Oct. 23, were bought for $0.60 to $0.85 with shares at $41.26. This was clearly fresh buying, as open interest in the strike was a mere 87 contracts before that session began.

Those calls have so far traded for $2.93 today, at least 3 times their purchase prices. The stock rose 8.14% in the same time period, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

CSIQ was last up 11.66% in afternoon trade at $44.06. The solar-technology company is estimated to report earnings next on Nov. 12.