Option traders are making another pass in their orbit higher with big profits today on bullish positions opened in Virgin Galactic Holdings (SPCE) yesterday.
On Jan. 25, Market Rebellion’s Unusual Activity Service found that 6,000 Weekly $41 calls expiring this Friday, Jan. 29, were bought for $0.66 to $1.11 with shares at $36.05. This was clearly fresh buying, as open interest was only 308 contracts before the activity appeared.
Those calls traded for as much as $4.45 this afternoon, at least 4 times their purchase prices. The stock rose 21.91% at the same time, underscoring how quickly options can far outperform their underlying shares.
This marks the second winning trade in the name to be posted on Market Rebellion in the past week.
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.
SPCE was higher by 16.84% to close at $42.05 this session. The spaceflight company, founded by Richard Branson, lifted sharply today to set a new all-time high of $44.03.