Option traders have run up fast profits in Square (SQ) calls.
On Oct. 30, Market Rebellion’s Unusual Activity Service identified the the purchase of 15,000 November $47.50 calls for $0.67 to $0.68 with shares at $39.25. Volume was clearly above the previous open interest of 7,982 contracts, indicating that this was a new position.
Those calls have traded for up $5.45 today, a 701.47% return, while the stock surged 31.47% in the same time period, an enormous move but one that was still dwarfed by the gain of its options on a relative basis.
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.
SQ was last up by 12.87% to $49.65.
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