Option bulls score big in $ATER

Option traders who opened bullish positions in Aterian Inc (ATER) towards the end of last month are seeing big gains this week..

On Aug. 27, Market Rebellion’s UOA Service identified the purchase of 5,000 September $7.50 calls for $0.20 to $1.00 with shares at $4.51. This was clearly a new position, as open interest in the strike was only 1,658 contracts before the trade occurred.

Those calls traded for as much as $8.97 today, at least 8.5 times their purchase prices. The stock rose 265.63% at the same time, showing how options can far outpace gains in 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.

ATER was lower by 39.04% today, closing at $10.96.