Option bulls ride $PTON to gains

Option traders are logging big profits on upside positions in Peloton (PTON) today.

On Sep. 28, Market Rebellion’s Unusual Option Activity Service flagged the purchase of 9,800 Weekly $100 calls, expiring next Friday, Oct. 9, for $3.60 to $5.35 with shares at $95.23. Volume was above the strike’s existing open interest of 1,181 contracts, indicating that this was fresh buying.

Those calls traded for as much as $11.30 so far this morning, at least 2 times their purchase prices. The stock rose 15.76% in the same time frame, underscoring how quickly options can far outperform their underlying shares.

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.

PTON was last up 3.34% at $108.71 amid some broader market weakness. The fitness equipment and service company is estimated to report earnings on Nov 3.