$NIO call buyers score

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

On Oct. 13, Market Rebellion’s Unusual Activity Service flagged the purchase of 8,000 Weekly $21 calls expiring on Nov. 13 for $2.49 to $2.66 with shares at $21.23. This was clearly fresh buying, as open interest in the strike was only 125 contracts before that session began.

Those calls have traded up to $10.47 so far today, about 4 times their average purchase prices. The stock rose 47.72% 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 last up 15.52% at $31.79, printing new all-time highs this session.