Options News
$SOGO calls rack up fast profits
It has taken just two sessions for bullish option traders to reap enormous gains in Chinese company Sogou (SOGO). On Jul. 24, Market Rebellion’s Unusual Activity Scanners identified the purchase of 17,500 August $7.50 calls for $0.10 to $0.25 with shares at $5.70. This was clearly fresh buying, as volume was well above the previous open interest […]
It has taken just two sessions for bullish option traders to reap enormous gains in Chinese company Sogou (SOGO).
On Jul. 24, Market Rebellion’s Unusual Activity Scanners identified the purchase of 17,500 August $7.50 calls for $0.10 to $0.25 with shares at $5.70. This was clearly fresh buying, as volume was well above the previous open interest of 964 contracts.
Those calls traded up to $1.25 today, at least 5 times their purchase prices. The stock rose 50.18% in the same time frame, showing how quickly options can far outperform 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.
SOGO popped this morning, last up 47.48% to $8.48 on the day. The Beijing-based Internet search service received a non-binding proposal from Tencent this morning to acquire the company for $9.00 per share.