$DG call buyers see quick gains

Bullish option traders are seeing quick gains in short-term positions on Dollar General Corp (DG) today.

On May 15, Market Rebellion’s Unusual Activity Service found that 3,100 May $148 calls were bought for $0.21 to $0.31 with shares at $141.82. Volume was well above the strike’s open interest of 215 contracts, indicating that this was clearly fresh buying.

Those calls have sold for as much as $1.35 today, a 335.48% return, while the stock rose 4.17% 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.

DG was last up 3.48% at $145.98.