Upside option traders posted huge gains on Friday, and they posted even more profits today.
Late Friday afternoon, Investitute’s tracking systems showed that 2,300 Weekly $6 calls expiring on Sept. 1 were purcahsed for $0.05 to $0.07 with shares at $5.75. These were clearly new positions, as open interest in the strike was only 895 contracts before the trades occurred.
Those calls rose to $0.24 today, an average gain of 300 percent. The stock was up 6.6 percent at the same time, illustrating how quickly options can far outpace gains in their underlying shares. It was the second winning call trade in Fitbit posted on Investitute in as many days.
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.
FIT was up 3.66 percent to close at $5.94 today after peaking at $6.17 in the morning. The fitness-device retailer rallied hard after reporting a quarterly loss that was narrower expected early this month.