$CVNA calls take driver’s seat

Option traders doubled their money on bullish positions in Carvana today.

On Oct. 15, Investitute’s market scanners identified the purchase of 4,000 November $44 calls for $4.35 to $4.70 as part of a bullish roll with shares at $42.81. This was clearly a new position, as open interest in the strike was a mere 148 contracts before that session began.

Those calls traded for as much as $10 this morning, more than twice their purchase prices. The stock surged 25.88% in the same time period, a huge move but still 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 surged 11.48% to $51.47 today. The online used-car service rallied on strong revenues reported after the market closed yesterday.