Traders keep cashing in on Square as it rallies to all-time highs.
On June 6, Investitute’s tracking systems detected the purchase of 2,800 July $25 calls for $0.73 to $1.05 with shares at $24.31. These were clearly new positions, as open interest in the strike was just 456 contracts before the trades occurred. Stock 24.31.
Those calls traded for $2.10, more than doubling in value, before they expired when the market closed yesterday. The stock rose 11.1 percent in the same period, illustrating the kind of leverage that can be achieved through options. It was the second winning trade in Square posted on Investitute in less than two weeks.
Long calls lock in the price where the 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.
SQ rose 1.74 percent to $26.85 yesterday, its highest close since going public in November 2015. Shares have rallied amid takeover speculation as analysts have become increasingly bullish on the electronic-payment industry.