Foot Locker (FL) bulls turned quick profits on upside positions today.
Minutes before the closing bell yesterday on Dec. 20, Market Rebellion’s Unusual Option Activity Service found that 2,500 Weekly $33.50 calls, expiring this Friday, were bought for $0.35 to $0.40 with shares at $32.83. This was clearly fresh buying, as open interest in the contract was just 3 before the activity appeared.
Those calls traded for as much as $2.51 this session, more than 6 times their purchase prices. The stock rose 9.47% at the same time, underscoring how quickly 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.
FL ended today’s session up 9.66% to $36.00.
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