$DGLY call prices spike in minutes

Option traders made very quick profits in Digital Ally (DGLY) today.

Only minutes ago, Market Rebellion’s Unusual Activity programs found that 10,200 July $3 calls, expiring this Friday, were purchased for $0.10 to $0.40 with shares at $3.18. This was clearly a new position, as open interest in the strike was only 380 contracts before the activity appeared.

Those calls traded for as much as $0.85 today just minutes after, at least 2 times their purchase prices. The stock rose 18.87% at the same time, showing how quickly options can far outpace gains in their underlying shares.

Long calls lock in the price where the 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.

DGLY was last up 26.93% at $3.30 this morning after reaching $3.79 earlier. The company announced that it had been awarded a government contract for $12.12 million worth of body cameras this morning.