Option traders are seeing big profits today on bullish positions opened in Workhorse (WKHS) as call prices work higher.
On Jan. 25, Market Rebellion’s Unusual Activity Service found that 5,300 Weekly $24 calls expiring on Feb. 12 were bought for $2.64 to $3.50 with shares at $24.80. This was clearly fresh buying, as open interest was only 303 contracts before the activity appeared.
Those calls traded for as much as $15.30 this morning, at least 4 times their purchase prices. The stock rose 48.99% 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.
WKHS was higher by 8.14% to close at $34.80 this session. The electric vehicle company’s shares saw a new high today of $40.45 today.