$SPCE calls fuel more gains

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

Last week on Jul. 16, Market Rebellion’s Unusual Activity Service found that 6,250 Weekly $20 calls expiring this Friday, Jul. 24, were bought for $1.12 to $1.90 with shares at $19.33. This was clearly fresh buying, as open interest was only 5,037 contracts before the activity appeared.

Those calls have traded for as much as $6.30 this afternoon, at least 3 times their purchase prices. The stock rose 36.06% at the same time, underscoring how quickly options can far outperform their underlying shares.

It is the second winning trade in the name posted by Market Rebellion this month.

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 was last higher by 10.14% to $25.31this session. The spaceflight company, founded by Richard Branson, will report earnings on Aug. 3 after the closing bell.