Option traders are posting big profits today on bullish positions opened in Pfizer (PFE).
On May. 22, Market Rebellion’s Unusual Activity Service found that 12,00 Weekly $38 calls, expiring this Friday, were bought for $0.04 to $0.44 above the existing open interest of 4,795 contracts with shares at $36.83.
Those calls have traded for up to $1.98 so far today, a 350% return, while the stock rose 9.39% in the same time frame, showing how quickly options can far outpace gains in 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.
PFE was last up 3.14% at $39.96 in afternoon trade.
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