$NU option bulls bank profits

Option traders are banking big profits in upside option positions that were opened on Nu Holdings Ltd (NU) a month ago.

On Apr. 4, Market Rebellion’s Unusual Option Activity Service found that 42,000 June $10 calls were bought for $0.82 to $0.84 as part of a bullish spread, above the existing open interest of 1,978 with shares at $9.34.

Those calls have traded for as much as $2.74 this session, a 226.19% return, while the stock gained 34.48% at the same time, a large move but nowhere near that of its options 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.

NU was last higher on the day by 1.05% at $12.57.