Option traders are turning large profits on upside positions in Vertiv Holdings Co (VRT) today.
On Jun. 23, Market Rebellion’s Unusual Activity Service found that 5,500 September $22.50 calls were bought for $2.90 as part of a bullish roll with shares at $23.50. This was clearly fresh buying, as open interest in the strike was just 3,206 contracts before the activity appeared.
Those calls changed hands for as much as $12.90 today, a 344.83% return, while the stock rose 49.7% in the same time frame, 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.
VRT was last up 29.57% at $34.38 today.