Wendy’s (WEN) call buyers are gobbling up gains this session.
On May 12, Market Rebellion’s Unusual Activity Service found that 12,700 21August $8 calls were bought for $0.55 to $0.70 with shares at $7.93. Open interest in the strike before the trade occurred was just 7,545, showing that this was a new position.
Those calls have traded up to $2.45 today, a 250% return, while the stock rose 10.72% 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.
WEN is up 25.18% to $7.83 in morning trading.
WEN is up 0.34% to $20.85 in morning trading. On Friday the fast-food chain raised its dividend and announced same-store sales that surpassed expectations.
