$NIO bulls double money overnight

Option traders made speedy gains today on upside positions opened in Chinese electric-car maker NIO (NIO).

Just yesterday morning on Aug. 24, Market Rebellion’s Unusual Activity Service flagged the purchase of 21,300 Weekly $15 calls expiring this Friday, Aug. 28, for $0.46 to $0.70 with shares at $14.87. This was clearly fresh buying, as open interest in the strike was 14,080 contracts before that session began.

Those calls traded up to $1.45 today, at least double their purchase prices. The stock rose 20.11% in the same time, underscoring how quickly 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.

NIO was up 19.17% at $17.84 at the close after printing a new high of $17.87. The Shanghai-based auto manufacturer was upgraded to a Neutral from Sell at UBS today.