Bullish option positions posted big gains today as Square rebounded.
On Oct. 26, Investitute’s market scanners identified the purchase of 7,708 November $33 calls for $2.55 as part of a bullish spread. Shares were $34.51 at the time.
Those calls were listed at $6.70 today, 3 times their purchase price. The stock rose 15 percent in the same time frame, underscoring the type of leverage that can be obtained with options.
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 up 3.29 percent today to close at $39.21. The electronic-payment service initial fell despite beating earnings and revenue estimates Wednesday night, but the stock has rebounded sharply since then.