It took just two sessions for option traders to turn magical gains on upside positions in Disney (DIS).
On Jan. 23, Market Rebellion’s Unusual Option Activity Service found that 6,000 Weekly $105 calls, expiring Jan. 27, were bought for $0.75 to $1.45 with shares at $103.18. This was clearly fresh buying, as open interest in the contract was just 2.590 before the activity appeared.
Those calls have traded for as much as $3.15 this session, more than 2 times their purchase prices. The stock rose 4.56% 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.
DIS was last higher on the day by 1.75% at $107.85.
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