Option bulls score overnight in $AI

Bullish option traders are being rewarded with big gains this session in C3.ai Inc (AI).

On Jun. 14, Market Rebellion’s Unusual Option Activity Service identified the purchase of 3,400 June $38 calls for $1.65 to $3.50 with shares at $37.51. The volume was well above the open interest of 2,561 contracts at the time, indicating that this was a new position.

Those calls have traded for as much as $10.00 today, a 185.71% return, while the stock rose 27.97% at the same time, showing how 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.

AI was last up by 11.23% to $47.65 in morning trade.