Option traders are scoring supersized gains on short-term positions opened in McDonald’s Corp (MCD) yesterday.
On Oct. 12, Market Rebellion’s Unusual Option Activity Service found that 3,900 Weekly $247.50 calls, expiring tomorrow, were bought for $0.22 to $0.30 above open interest of just 270 contracts with shares at $238.50.
Those calls traded for as much as $3.05 today, at least 10 times their purchase prices. The stock rose 4.42% in the same time frame, illustrating the kind of leverage that can be achieved quickly with options.
Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.
MCD was up 4.07% at $246.75 to close out this session.
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