Bullish option traders are posting exponential gains in Melco Resorts & Entertainment (MLCO) this session.
On Jun. 8, Market Rebellion’s Unusual Option Activity Service found that 5,250 January $8 calls were bought for $1.00 with shares at $5.97. This was clearly fresh buying, as open interest in the contract was just 4,882 before the activity appeared.
Those calls changed hands for $5.20 today, more than 5 times their purchase price. The stock rose 120.77% in the same time frame, 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.
MLCO settled up 2.44% at $13.42 this session.