$NKLA option bulls triple money

Nikola (NKLA) bulls are turning big gains on upside option positions today.

On Jul. 19Market Rebellion’s Unusual Option Activity Service found that 39,738 Weekly $6 calls, expiring this Friday, were bought for $0.44 to $0.49 as part of a bullish spread with shares at $5.60. This was clearly fresh buying, as open interest in the contract was just 759 before the activity appeared.

Those calls have traded up to $1.33 today, about 3 times their purchase prices. The stock rose 28.04% in the same time frame, illustrating the kind of leverage that can be achieved 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.

NKLA was last up by 4.32% at $7.00.

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