$SOLO bulls run up gains

Bullish option traders are running up big gains in upside positions opened in Canadian electric-vehicle maker ElectraMeccanica (SOLO).

On Oct. 14, Market Rebellion’s Unusual Activity Service flagged the purchase of 3,200 November $3 calls for $0.40 to $0.80 with shares at $3.13. This was clearly fresh buying, as open interest in the strike was only 1,804 contracts before that session began.

Those calls have traded up to $4.80 so far today, 6 times their purchase prices. The stock rose 150.16% in the same time, underscoring how options can far outpace gains in their underlying shares on a relative basis.

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.

SOLO was last up 18.43% at $5.72, printing a new 52-Week high this session.