$NIO bulls get a delivery of gains

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

On Jun. 9, Market Rebellion’s Unusual Activity Service flagged the purchase of 4,750 Weekly $8  calls expiring today, Jul. 2, for $0.40 to $0.47 with shares at $6.40. This was clearly fresh buying, as open interest in the strike was only 307 contracts before that session began.

Those calls traded up to $1.18 today, more than 2.5 times their purchase prices. The stock rose 43.44% in the same time, underscoring how quickly options can far outpace gains in their underlying shares on a relative basis.

This is the fourth winning trade posted on Market Rebellion in the last month in the name.

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 last up 13.02% at $8.94 today after printing a new high 52-Week high of $9.18 earlier in the session. The Shanghai-based auto manufacturer’s shares are rising after it reported the delivery of 3,740 vehicles in June, representing growth of 179.1% year-on-year.