Option traders are posting major profits today as Amazon.com (AMZN) rises.
Yesterday on Sep. 7, Market Rebellion’s Unusual Option Activity Service found that 34,000 Weekly $138 calls, expiring Sep. 8, were bought for $0.16 to $0.32 with shares at $134.95. This was clearly fresh buying, as open interest in the contract was just 9,296 before the activity appeared.
Those calls have changed hands for as much as $0.93 this session, a 190.63% return, while the stock rose 2.89% in the same time frame, illustrating the kind of leverage that can be achieved with options.
Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.
AMZN was last up by 0.54% at $138.60.
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