Option bulls are being rewarded today with big profits on upside positions in Goldman Sachs Group Inc (GS).
On Jul. 12, Market Rebellion’s Unusual Activity Service found that 10,500 July $350 calls were bought for $1.02 to $1.20 above the existing open interest of 2,566 with shares at $328.91.
Those calls have traded for as much as $3.20 during this session, a 166.67% return, while the stock rose 6.91% in the same time frame, showing how options can far outperform their underlying shares on a relative basis.
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.
GS was last at $350.73, up 2.99% on the session.
Ready to start trading? Try Unusual Option Activity Essential. Learn how you can follow the “smart money” with a fresh UOA trade idea each week – including technical levels so that you know how to manage each trade!
