$LUMN call prices light up overnight

Bullish Lumen Technologies Inc (LUMN) option traders that opened upside positions yesterday are already seeing gains.

On Sep. 4, Market Rebellion’s Unusual Option Activity Service found that 10,600 Weekly $5 calls, expiring Sep. 6, were bought for $0.05 to $0.14 with shares at $4.53. This was clearly fresh buying, as open interest in the contract was just 1,525 before the activity appeared.

Those calls traded for as much as $0.65 today, a 364.29% return, while the stock rose 24.28% 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.

LUMN was last up 2.23% at $5.50.