$PDD option bulls score at highs

Option traders scored exponential profits this session on upside call positions opened on Christmas Eve in Chinese e-commerce company Pinduoduo (PDD).

On Dec. 24, Our Uusual Activity tracking systems detected the purchase of 2,000 January $157.50 calls for $2.69 to $4.33 above open interest of 8contracts, with shares at $140.20.

Those calls traded for as much as $30.71 ahead of the closing bell today, at least 7 times their purchase prices. The stock rose 33.72% 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.