$CVNA calls drive profits

Carvana (CVNA) option traders got behind the wheel of bullish positions last month and are driving big profits this session.

On Sep. 20, Market Rebellion’s Unusual Option Activity Service found that 3,000 Weekly $175 calls, expiring Oct. 11, were bought for $6.60 to $7.28 with shares at $168.97. This was clearly fresh buying, as open interest in the contract was just 81 before the activity appeared.

Those calls have traded for as much as $16.00 this session, a 97.8% return, while the stock gained 12.85% at the same time, 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.

CVNA settled higher on the day by 6.26% at $190.99.