Option traders are turning big profits on upside positions in Weight Watchers (WW) today.
Today on Jul. 21, Market Rebellion’s Unusual Activity Service found that 2,000 October $10 calls were bought for $0.94 with shares at $8.14. This was clearly fresh buying, as open interest in the strike was just 1,894 contracts before the activity appeared.
Those calls changed hands for as much as $3.20 today, a 240.43% return, while the stock rose 9.45% 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.
WW was last up 10.37% at $13.04 today.