$RDDT call buyers score

Well-timed bullish option trades are turning profits in Reddit Inc (RDDT) today.

On Oct. 28, Market Rebellion’s Unusual Activity Service found that 4,000 Weekly $86 calls, expiring Nov. 1, were bought for $2.90 to $2.98 with shares at $81.24. This was clearly fresh buying, as open interest in the contract before the activity appeared was just 42.

Those calls have sold for as much as $30.00 today, a 906.71% return, while the stock rose 42.73% in the same time period, underscoring how 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.

RDDT was last up 41.17% to $115.39.