$PTON bulls ride for gains

Option traders are riding for fast profits on upside positions in Peloton (PTON) today.

On Dec. 14, Market Rebellion’s Unusual Option Activity Service flagged the purchase of 14,000 December $125 calls, expiring tomorrow, for $1.84 to $3.70 with shares at $120.15. Volume was above the strike’s existing open interest of 3,497 contracts, indicating that this was fresh buying.

Those calls traded for as much as $12.63 today, more than 3 times their purchase prices. The stock rose 14.39% in the same time frame, underscoring how quickly options can far outperform 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.

PTON was up 2.09% at $136.80 at the close. The fitness equipment and service company’s stock will be added to the Nasdaq 100 Index after the close tomorrow.