$SOXL call prices rise

Chip bulls are seeing their bets be rewarded today in upside call positions on the Direxion Daily Semiconductor Bull 3X Shares Fund (SOXL).

On Jul. 27Market Rebellion’s Unusual Option Activity Service found that 26,000 Weekly $17.50 calls, expiring this Friday, were bought for $0.81 to $1.12 with shares at $17.33. This was clearly fresh buying, as open interest in the contract was just 2,866 before the activity appeared.

Those calls have traded for as much as $1.95 today, quadruple their purchase prices. The fund rose 11.43% 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.

SOXL was last up 2.88% today at $19.27.

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