$SE pays off again for bulls

It took just three sessions for option traders to cash in more gains on upside positions in Sea Limited (SE).

On June 21, Investitute’s proprietary programs flagged the purchase of 4,700 July $34 calls for $1.20 to $1.35 with shares at $32.93. This was clearly fresh buying, as open interest in the strike was a mere 63 contracts before the activity appeared. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report” and updated the trade on the program today.

Those calls traded up to $2.10 today, nearly twice their purchase price. The stock rose 5.5% in the same time frame, showing how quickly options can far outpace gains in their underlying shares.

It is the second winning trade in the name posted on Investitute in as many days.

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.

SE climbed to an all-time high of $34.84 this morning but pulled back with the broader market to trade at $33.47 this afternoon, down 2.11% on the day. The Singapore-based digital entertainment, e-commerce, and financial-services company has rallied sharply since reporting strong user numbers in mid-May.