Upside calls bought in PagSeguro Digital (PAGS) over two months ago are paying off for patient option traders today
On Mar. 3, Market Rebellion’s Unusual Activity Service found that 15,000 May $10 calls, expiring next Friday, were bought for $0.75 as part of a bullish spread above the existing open interest of 1,587 contracts with shares at $9.22.
Those calls have traded for as much as $2.15 this session, a 186.67% return, while the stock gained 31.45% at the same time, a large move but nowhere near 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.
PAGS is up 5.67% to $12.31 in midday trading.