$PENN bulls rake in profits

Bullish Penn National Gaming (PENN) option traders are raking in profits on their winning hand today.

On Dec. 2, Market Rebellion’s Unusual Activity scanners identified the purchase of 4,000 December $80 calls expiring this Friday, Dec. 18, as part of a bullish spread for $1.50 to $1.87 with shares at $72.35. These were clearly new positions, as open interest in the strike was just 3,146 contracts before the activity appeared.

Those calls traded up to $6.00 today, well over triple their purchase prices. The stock rose 16.21% in the same time frame, illustrating the kind of leverage that can be achieved through options.

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.

PENN made a new life high of $84.49 today and closed at $79.01, up 6.17% on the day.