Traders who opened bullish positions in Qorvo this morning saw huge gains by the afternoon.
Barely 15 minutes into today’s session, Investitute’s tracking systems found that 6,500 November $82.50 calls were purchased for $0.35 to $0.50 with shares at $78.71. This was clearly fresh buying, as volume was well above the strike’s open interest of 2,035 contracts.
Those calls traded for $1.05 at the end of today’s session, 3 times its original purchase price. The stock was up less than 1.5 percent at the same time, showing how quickly options can far outpace gains in 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.
QRVO rose 3.01 percent to $80.82 today. The chip maker, which broke above its 50- and 200-day moving averages this week, was picked by Investitute co-founder Pete Najarian for his final trade on CNBC’s “Fast Money” program last night.