XPeng (XPEV) shares charged up today, and bullish option traders are making gains.
On Jun. 30, Market Rebellion’s Unusual Activity Service found that 10,000 August $18 calls were bought for $0.44 to $0.50 above the existing open interest of 72 contracts with shares at $13.44.
Those calls have traded for up to $4.00 today, a 700% return, while the stock rose 57.74% in the same time frame, showing how quickly options can far outpace gains in 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.
XPEV was up by 27.24% at $19.57.
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