$PETS calls fetch gains

1-800-PetMeds (PETS) is running higher today, delivering gains on upside option positions opened last Friday.

On May 28, Market Rebellion’s Unusual Activity Service found that 2,600 June $35 calls were bought for $0.15 to $0.35 above open interest of just 1,165 contracts with shares at $29.34.

Those calls have traded up to $6.90 so far this morning, more than 19 times their purchase prices. The stock rose 20.07% at the same time, showing how options can quickly outperform their underlying shares by a wide margin.

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.

PETS was last up 25.52% at $36.50 in midday trade.