Option traders are dialing up big profits today as Sierra Wireless, Inc. (SWIR) rises.
On May 3, Market Rebellion’s Unusual Option Activity Service found that 5,000 September $17.50 calls were bought for $1.65 as part of a bullish spread with shares at $16.31. This was clearly fresh buying, as open interest in the contract was just 167 before the activity appeared.
Those calls were last marked for $12.10, over 7 times their purchase price. The stock rose 76.76% 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.
SWIR was last up by 15.88% at $28.83.
Ready to start trading? Try Unusual Option Activity Essential. Learn how you can follow the “smart money” with a fresh UOA trade idea each week – including technical levels so that you know how to manage each trade!