Option traders are aiming for big profits on upside positions in Luminar Technologies (LAZR) today.
On Feb. 21, Market Rebellion’s Unusual Activity Service detected the purchase of 50,000 Weekly $7.50 calls, expiring this Friday, for $0.41 with shares at $6.59. Open interest in the strike before the trade occurred was just 40,994 contracts, showing that this was a new position.
Those calls have traded for as much as $2.05 today, 5 times their purchase price. The stock rose 41.58% 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.
LAZR was last higher on the day by 4.73% to $9.29.
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