$PDD call prices double

Option traders scored big profits this morning on upside call positions opened just last week in Chinese e-commerce company Pinduoduo (PDD).

On Wednesday, Nov. 4, Our Uusual Activity tracking systems detected the purchase of 2,000 November $130 calls in one print for $2.35 above open interest of 45 contracts, with shares at $109.19.

Those calls traded for as much as $11.70 after the opening bell today, nearly 5 times their purchase price. The stock rose 25.84% at the same time, underscoring 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.