Options bulls gain overnight in $FLEX

Option traders are collecting fast gains on upside positions in Flex (FLEX) today.

Just yesterday afternoon on Oct. 15, Market Rebellion’s Unusual Option Activity Service flagged the purchase of 2,200 Weekly $12 calls, expiring on Oct. 23, as part of a bullish roll for $0.40 with shares at $12.09. Volume was above the strike’s existing open interest of 754 contracts, indicating that this was fresh buying.

Those calls have traded for as much as $2.60 so far today, 6.5 times their purchase price. The stock rose 19.19% 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.

FLEX was last higher by 15.12% at $14.47. The electronics contract manufacturer was upgraded to Outperform from Sector Perform at RBC Capital this morning, which also raised its price target on the shares to $16 from $12 while JPMorgan also raised its price target on the stock to $16 from $14.