$MLCO call prices triple overnight

Option traders racked big gains today on bullish positions opened in Melco Resorts & Entertainment only one session earlier.

Just yesterday, Investitute’s tracking systems detected the purchase of 3,000 August $24 calls for $0.80 to $0.82 as part of a bullish spread with shares at $23.52. This was clearly a new position, as volume was well above the strike’s open interest of 2,416 contracts. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for $2.75 this morning, more than 3 times their purchase prices. The stock rose 13.18% at the same time, showing how quickly 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.

MLCO popped 3.74% to $24.97 today. The casino operator rallied after posting quarterly results this morning.