Option traders are logging big profits on upside positions opened in Teladoc (TDOC) just two sessions ago.
On Jan. 20, Market Rebellion’s Unusual Activity Service detected the purchase of 3,300 Weekly $250 calls, expiring today, Jan. 22, for $1.05 to $5.40 with shares at $235.12. This was clearly fresh buying, as open interest in the strike was just 2,681 contracts before the activity appeared.
Those calls traded for as much as $13.02 today, well over 2 times their purchase prices. The stock rose 1.92% at the same time, underscoring how quickly 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.
TDOC closed up by 6.95% to $263.00 today. The telemedicine and virtual healthcare company closed at a new all-time high this session.