$JMIA calls deliver large profits

Jumia (JMIA) traded sharply higher today, and upside option positions opened last week are seeing large profits.

On Dec. 1, Market Rebellion’s Unusual Activity Service found that 4,500 December $12 calls, expiring next Friday, were bought for $0.66 to $0.70 as part of a bullish spread above the existing open interest of 201 contracts with shares at $11.47.

Those calls traded up to $2.89 today, more than 4 times their purchase prices. The stock rose 28.68% at the same time, showing how options can quickly outperform their underlying shares by a wide margin.

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.

JMIA closed higher on the day by 9.87% to $14.69.