$PTON bulls keep their gains spinning

Option traders have logged more big profits on upside positions opened in Peloton (PTON) after its earnings report.

On May 5, Market Rebellion’s Unusual Option Activity Service flagged the purchase of 6,325 May $37.50 calls, as part of a bullish roll, for $2.50 with shares at $36.02. Volume was above the strike’s existing open interest of 60 contracts, indicating that this was fresh buying.

Those calls have traded for as much as $8.69 this morning, more than 3 times their purchase price. The stock rose 26.62% in the same time frame, underscoring how quickly options can far outperform their underlying shares.

It is the second winning trade posted on Market Rebellion in as many sessions.

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.

PTON ended the session higher by 16.01% at$44.12. The fitness equipment and service company reported better than anticipated revenues during its earnings report yesterday afternoon.