$CZR bulls score a jackpot

Option traders have made exponential gains on their money in upside bets on Caesars Entertainment (CZR).

On May. 12, Market Rebellion’s Unusual Option Activity Service detected the purchase of 10,000 September $10 calls in one print for $1.28 with shares at $10.14. This was clearly fresh buying, as open interest in the strike was just 1,275 contracts before that session began.

Those calls ended the session marked for $38.65 today, more than 30 times their purchase prices The stock rose 383.73% in the same time period, 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.

CZR closed the day at $49.05, up 3.79% for the day. The stock has rallied off its March lows to close at its highest level since its COVID-19 decline while at the same time progress has been made towards rapid testing and a vaccine.