$LABU call prices double overnight

Bullish option traders are turning fast profits in upside positions opened on the Direxion Daily S&P Biotech Bull 3X Shares ETF (LABU).

Just yesterday, Market Rebellion’s Unusual Option Activity Service found that 10,000 Weekly $8 calls, expiring this Friday, were bought for $0.50 with shares at $7.93. This was clearly fresh buying, as open interest in the strike was only 2,808 contracts.

Those calls have traded up to $1.43 so far today, more than 2.5 times their purchase prices. The stock rose 16.65% in the same time, underscoring how options can far outpace gains in their underlying shares 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.

LABU was last down on the day by 1.51% at $8.50 after trading up to $9.35 earlier in the session.

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