Calls ring up huge gains in $OSTK

Traders quadrupled their money in upside positions on Overstock.com less than a week after opening them.

On Oct. 20, Investitute’s market scanners identified the purchase of 1,780 November $40 calls for $1.97 to $3 with shares at $37.35. Volume was nearly double the strike’s open interest of 975 contracts, indicating that this was fresh buying.

Those calls traded for $8.30 today, more than 4 times its original purchase price. The stock rallied 23.7 percent in the same time frame, a large gain 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.

OSTK jumped 11.37 percent to $46.05 today. The online retailer spiked higher this morning on plans for a $500 million initial coin offering by subsidiary tZero.