Option traders are putting up fast profits today as Revlon Inc (REV) rises.
Less than an hour ago, Market Rebellion’s Unusual Option Activity Service found that 3,500 Weekly $5.50 calls, expiring this Friday, were bought for $0.34 to $0.65 with shares at $5.85. This was clearly fresh buying, as open interest in the contract was just 230 before the activity appeared.
Those calls have already traded up to $2.00, over 3 times their purchase prices. The stock rose 23.93% 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.
REV was last up by 62.36% at $7.29.
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