Option bulls $RIDE for quick gains

Lordstown Motors Corp (RIDE) is giving bullish option traders a ride toward quick gains in upside positions opened early in the session.

Only 10 minutes into the session this morning, Market Rebellion’s Unusual Activity Service found that 5,000 Weekly $7 calls, expiring tomorrow, were bought for $0.28 to $0.61 with shares at $6.52. This was clearly fresh buying, as open interest in the strike was just 1,824 contracts before the activity appeared.

Those calls traded for as much as $1.11 today, about 2 times their purchase prices. The stock rallied 18.87% in the same time period, a huge move but still 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.

RIDE closed higher on the day by 17.79% at $6.49. The company announced that it had appointed Daniel Ninivaggi as its new Chief Executive Officer.