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$OSTK calls double in hours
Option traders who opened bullish positions in Overstock.com (OSTK) this morning were logging large profits by the afternoon. About 40 minutes after the opening bell, Market Rebellion’s activity scanners found that 3,700 Weekly $13 calls expiring this Friday were bought for $0.05 to $0.20 with shares at $10.66. This was clearly new positioning, as existing […]
Option traders who opened bullish positions in Overstock.com (OSTK) this morning were logging large profits by the afternoon.
About 40 minutes after the opening bell, Market Rebellion’s activity scanners found that 3,700 Weekly $13 calls expiring this Friday were bought for $0.05 to $0.20 with shares at $10.66. This was clearly new positioning, as existing open interest in the strike was only 572 contracts.
Those calls have traded for as much as $0.35, twice their average purchase price. The stock rose 7.04% 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.
OSTK is up 9.88% to $11.23 in midday trading. Last week shares of the online retailer bounced near a support level from June not far from 52-week lows.