$PDD call buyers grow profits overnight

$PDD call buyers grow profits overnight

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Option traders scored exponential profits this session on upside call positions opened yesterday in Chinese agriculture-focused technology platform PDD Holdings Inc (PDD).

On Nov. 27Market Rebellion’s Unusual Option Activity Service found that 4,000 Weekly $116 calls, expiring Dec. 1, were bought for $6.50 with shares at $116.40. This was clearly fresh buying, as open interest in the contract was just 625 before the activity appeared.

Those calls traded for as much as $23.75 today, a 265.38% return, while the stock rose 20.04% in the same time period, underscoring how 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.

PDD was last up on the day by 18.06% to $138.98.

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