$AFRM call buyers triple their money

Option traders are collecting big gains on upside positions in Affirm Holdings Inc (AFRM) today.

On Jan. 20Market Rebellion’s Unusual Option Activity Service found that 8,300 Weekly $13 calls, expiring Jan. 27, were bought for $0.47 to $0.75 with shares at $12.45. This was clearly fresh buying, as open interest in the contract was just 1,056 before the activity appeared.

Those calls traded for as much as $2.88 this session, more than 3.5 times their purchase prices. The stock rose 26.83% at the same time, 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.

AFRM closed higher on the day by 8.04% at $15.45.

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