Upside option positions are scoring huge gains in Glu Mobile less than a week after they were opened.
Last Wednesday, Investitute’s proprietary programs found that 5,200 December $5 calls were purchased for $0.09 to $0.15 with shares at $3.78. Open interest in the strike was a mere 48 contracts before the trades occurred, showing that they were new positions.
Those calls sold for $0.36 today, 4 times their original purchase price. The stock rallied 22.5 percent in the same time frame, an impressive move but nowhere near that of its options.
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.
GLUU was up 4.75 percent to close at $4.63 this afternoon after hitting a new 52-week high of $4.71 in the morning. The stock has more than doubled in the last year with rising popularity of the company’s mobile-game titles, which include “Kim Kardashian: Hollywood” and “Restaurant Dash: Gordon Ramsay.” Glu Mobile also recently launched an app dedicated to Taylor Swift.