Lending Club bulls secure quick gains

It took just one day for option traders to post exponential profits in upside positions on Lending Club.

Just yesterday, Investitute’s market scanners identified the purchase of 8,600 August $6 calls for $0.05 to $0.16 with shares at $5.61. These were clearly new positions, as volume was well above the strike’s open interest of 3,720 contracts.

Those calls ended today’s session trading for $0.45, an average gaint of more than 300 percent just 24 hours later. The stock rallied 14.8 percent at the same time, showing 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.

LC surged 18.13 percent to $6.45 today. The online lending site announced a quarterly loss that was smaller than expected after yesterday’s close.