$SPCE call prices rocket higher

Option traders are racking up big profits today on bullish positions opened in Virgin Galactic Holdings (SPCE) last week.

Last week on Jun. 30, Market Rebellion’s Unusual Activity Service found that 3,500 Weekly $16 calls expiring tomorrow, Jul. 10, were bought for $0.51 to $0.67 with shares at $15.45. This was clearly fresh buying, as open interest was only 996 contracts before the activity appeared.

Those calls traded for as much as $3.46 by this afternoon, at least 5 times their purchase prices. The stock rose 25.94% at the same time, underscoring how quickly options can far outperform 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.

SPCE closed higher by 15.9% to $19.46 this session. The spaceflight company, founded by Richard Branson, will report earnings on Aug. 3 after the closing bell.