$RBA bulls bid up fast gains

Bullish option traders are bidding up big gains as Ritchie Bros. Auctions (RBA) pops higher today.

On Nov. 4, Market Rebellion’s Unusual Activity Service flagged the purchase of 3,000 November $70 calls for $1.40 as part of a bullish spread with shares at $66.41. This was clearly fresh buying, as open interest in the strike was only 18 contracts before that session began.

Those calls have traded for as much as $4.53 today, over 3 times their purchase price. The stock rose 11.35% in the same time frame, underscoring how options can far outperform moves 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.

RBA was last up 9.00% today at $74.63. The industrial asset disposition & management company topped earnings estimates after the close and will host its Investor Day on Dec. 7 at 10:00 AM ET.