$UVXY option bulls score quick gains

The ProShares Ultra VIX Short Term Futures ETF (UVXY) has risen sharply since Friday, rewarding upside call positions.

On Aug. 25Market Rebellion’s Unusual Option Activity Service found that 3,032 Weekly $11 calls, expiring on Sep. 9, were bought for $0.36 with shares at $9.48. This was clearly fresh buying, as open interest in the contract was just 2,292 before the activity appeared.

Those calls have traded for as much as $0.71 today, nearly double their purchase price. The ETF rose 14.03% in the same time frame, a large move but nothing like that 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.

The UVXY was last at $10.73, up 4.07% on the session.

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