$SDC bulls align with more gains

Option traders who opened bullish positions in SmileDirectClub (SDC) a few weeks ago are aligning themselves with more gains today.

On Apr. 8, Market Rebellion’s Unusual Activity programs found that 5,000 May $5 calls were bought for $0.65 to $0.75 with shares at $4.19. Volume was well above the strike’s existing open interest of 1,073 contracts, indicating that this was fresh buying.

Those calls have traded for as much as $1.85 today, about 2.5 times their average purchase price. The stock rose 61.37% at the same time, showing how quickly options can far outpace gains in their underlying shares.

It is the third winning position in the name posted on Market Rebellion in just over the past month.

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.

SDC was last higher by 19.85% at $6.46. Shares of the teledentistry company have risen sharply today after announcing an award for a patent for its SmileShop IP and commentary that it would begin to reopen in May.