$MLCO calls hit jackpot again

Bullish option traders are posting exponential gains in Melco Resorts & Entertainment (MLCO) for the third time this month.

On Dec. 12, Market Rebellion’s Unusual Activity Service identified the purchase of 14,473 January $23 calls in one print for $0.60 with shares at $22.09. This was clearly a new position, as open interest in the strike was only 309 contracts before the trade occurred.

Those calls have changed hands for as much as $1.65 so far today, nearly 3 times their initial purchase price. The stock rose 10.1% in the same time frame, underscoring how quickly options can far outperform their underlying shares.

It is the third winning trade in the name posted on Market Rebellion since Dec. 18.

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 is up 0.16% to $24.41 this morning. The company has rallied sharply along with other casino operators since China announced plans to make gambling capital Macau a major financial center.