$SDC bulls keep on smiling

Option traders who opened bullish positions in SmileDirectClub (SDC) last Friday are racking up gains worth grinning over.

On Apr. 17, Market Rebellion’s Unusual Activity programs found that 11,500 Weekly $4.50 calls expiring on Apr. 24 were bought for $0.25 to $0.55 with shares at $4.34. Volume was well above the strike’s existing open interest of 1,249 contracts, indicating that this was fresh buying.

Those calls have traded for as much as $1.35 today, at least double their purchase prices. The stock rose 35.02% at the same time, showing how quickly options can far outpace gains in their underlying shares.

It is the second winning position in the name posted on Market Rebellion 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 rose to an intraday high of $5.87 earlier this session before pulling back to close at $5.53, still up by 15.93%. Shares of the teledentistry company have been on the rise after announcing numerous initiatives on Thursday to help in the COVID-19 pandemic, including the delivery of its 35,000th face shield.