Upside options in Chinese Internet company YY posted huge gains before expiring this afternoon.
Back on May 10, Investitute’s systems found that 2,300 August $55 calls were bought for $2.43 to $3.30 with shares at $51.95. This represented new positioning, as volume was well above the strike’s open interest of 1,116 contracts,
Today those calls traded for $18.37, an average gain of more than 540 percent. The stock surged 41.2 percent in the same time period, but even that huge move was dwarfed by its soaring options.
Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.
YY rose 3.14 percent to $73.69 today. The social-media platform company reported strong quarterly results late last week but pulled back with the broader market.