$GDS call prices soar

Patient bullish option traders have quadrupled their money in GDS Holdings (GDS).

On Oct. 10, 2018, Market Rebellion’s Unusual Activity Service detected the purchase of 20,000 January *2020* $35 calls for $4.17 as part of a bullish spread with shares at $23.96. This was clearly fresh buying, as there was no open interest in the contract before that session began.

Those calls are marked currently for as much as $18.50, more than 4 times their purchase prices. The stock has risen 124.46% in the same time, a large move but nowhere near that of its options.

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.

GDS is higher by 4.27% to $53.78 today, just shy of its 52-week high of $54.00. The Chinese IT service management company’s shares have traded higher since a secondary offering in early December.