Bullish option traders are making fast gains today in Wynn Resorts (WYNN).
On Oct. 26, Market Rebellion’s Unusual Activity Service found that 2,500 Weekly $60 calls, expiring next Friday, Nov. 11, were bought for $2.29 to $2.41 as part of a bullish spread with shares at $57.06. This was clearly fresh buying, as open interest in the strike was just 141 contracts before the activity appeared.
Those calls have been sold for as much as $6.40 today, more than 2.5 times their purchase price. The stock rose 13.6% in the same time period, underscoring how 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.
WYNN is up 11.05% to $64.74 in midday trading.
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