$NKLA bulls drive toward gains

Nikola (NKLA) bulls are driving toward big gains on upside option positions today.

On Nov. 18, Market Rebellion’s Unusual Activity Service flagged the purchase of 2,900 Weekly $25 calls for $0.90 to $2.40 with shares at $23.31. This was clearly fresh buying, as open interest in the strike was only 831 contracts before the activity appeared.

Those calls have thus far traded for as much as $12.51 today, at least 5 times their purchase prices. The stock rose 60.96% in the same time frame, a huge move but nothing like that of its options.

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.

NKLA was last higher on the day by 21.01%, trading at $35.59. The battery-electric and hydrogen fuel-cell electric vehicle maker last Thursday was initiated with a Buy rating at Loop Capital.