$PDD calls double in hours

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

About 90 minutes into today’s session, Our tracking system detected the purchase of 7,000 September $34 calls bought for $0.57 to $0.80 above open interest of 231 contracts and as part of a bullish roll with shares at $32.25. Co-founder Jon Najarian cited the unusual activity shortly afterward on CNBC’s “Halftime Report.”

Those calls traded for as much as $1.55, more than twice their average purchase price as volume in the contracts more than tripled. The stock rose 4% at the same time, underscoring how quickly options can far outpace gains in their underlying shares.

It is the second winning trade in the name posted on Unusual Option Activity in as many weeks.

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.

PDD spiked to a 52-week high of $33.88 after Najarian cited today’s call buying but has since pulled back to $33.29 this afternoon, still up 7.63% on the session. The Shanghai-based company has rocketed higher since Jefferies rated as a “buy” with at $26.90 price target on Aug. 5.