Options News
Option bulls strike a gusher in $FANG
Traders are reaping huge gains today on bullish positions in Diamondback Energy (FANG). On Nov. 13, Market Rebellion’s Unusual Activity Service found that 5,600 March $40 calls were bought for $4.70 to $5.50 with shares at $38.53. This was clearly fresh buying, as open interest in the strike before the activity appeared was just 728. Those calls […]
Traders are reaping huge gains today on bullish positions in Diamondback Energy (FANG).
On Nov. 13, Market Rebellion’s Unusual Activity Service found that 5,600 March $40 calls were bought for $4.70 to $5.50 with shares at $38.53. This was clearly fresh buying, as open interest in the strike before the activity appeared was just 728.
Those calls have traded for $46.00 today, at least 8 times their purchase prices. The stock rallied 123.38% in the same time period, a large move but 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.
FANG was last up 3.81% today at $84.36. The hydrocarbon explorer has risen along with the price of crude.