Marathon Patent Group rallied sharply today, returning exponential gains on option positions opened just one session earlier.
Late Friday afternoon, Investitute’s proprietary programs cited the purchase of 2,000 December $5 calls for $1.10 to $3 with shares at $5.93. These were new positions, as there was no open interest in the strike before that session began.
Those calls traded for $5.80 today, more than 5 times their original purchase price. The stock surged 45.9 percent at the same time, a huge move but one that was still far below that of its options 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.
MARA spiked to a 52-week high of $10.03 early this morning but closed at $6.51, still up 9.41 percent on the session. The intellectual-property licensing company is considered a play on cryptocurrencies, as it purchased virtual miner Global Bit Ventures earlier this month.