Option bulls $RIDE for more profits

Lordstown Motors Corp (RIDE) is giving bullish option traders a ride toward more profits in upside positions opened earlier in the week.

On May 25, Market Rebellion’s Unusual Activity Service found that 2,200  Weekly $8.50 calls, expiring today, May 28, were bought for $0.33 to $0.42 with shares at $7.90. This was clearly fresh buying, as open interest in the strike was just 627 contracts before the activity appeared.

Those calls have traded for as much as $2.60 so far today, more than 6 times their purchase price. The stock rallied 40.89% in the same time period, a huge move but still nowhere near that of its options on a relative basis.

This marks the second winning trade in the name to be posted on Market Rebellion in the last couple of weeks.

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.

RIDE was last lower by 5.17% at $10.00 in late afternoon trading. Deutsche Bank initiated the name with a Hold and $8 price target this morning.