$SDC option bulls grin with gains

Option traders who opened bullish positions in SmileDirectClub (SDC) only yesterday are finding themselves with exponential gains today.

On Sep. 13, Market Rebellion’s UOA Service identified the purchase of 8,800 September $5.50 calls for $0.15 to $0.43 with shares at $5.22. This was clearly a new position, as open interest in the strike was only 7,425 contracts before the trade occurred.

Those calls traded for as much as $1.22 today, at least 2.5 times their purchase prices. The stock rose 26.82% at the same time, showing how quickly options can far outpace gains 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.

SDC was lower by 3.68% today, closing at $5.76 after trading up to $6.65 earlier in the session.