$PAGS option bulls buy the dip

Well-timed upside calls bought in PagSeguro Digital (PAGS) less than an hour ago are paying off for option traders that bought the dip today

Under an hour ago, Market Rebellion’s Unusual Activity Service found that 2,400 October $47.50 calls, expiring next Friday, were bought for $0.40 above the existing open interest of 360 contracts with shares at $44.49.

Those calls have already traded for as much as $1.15 today, at least 2 times their purchase price. The stock rose 5.24% in the same time frame, a large move but nothing like that of its options on a relative basis.

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.

PAGS was up 4.8% to $47.18 in midday trading.