$ABT bulls turn big gains

$ABT bulls turn big gains


Bullish positions that were opened in Abbott Laboratories (ABT) only two sessions earlier yielded exponential gains today.

On Nov. 20Market Rebellion’s Unusual Option Activity Service found that 7,000 Weekly $101 calls, expiring Nov. 24, were bought for $0.31 to $0.46 with shares at $99.72. This was clearly fresh buying, as open interest in the contract was just 116 before the activity appeared.

Those calls traded for as much as $2.10 today, a 356.52% return, while the stock rose 3.36% in the same time period, underscoring 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.

ABT was last up 0.94% to $102.87 in late day trading.

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