$SQ bulls round off the week with big gains

It took less than 24 hours for bullish option traders to run up exponential gains in Square (SQ).

Late yesterday, Market Rebellion’s Unusual Activity tracking systems found that 8,700 May $79 calls expiring today were bought for $0.31 to $0.56 with shares at $76.50. This was clearly fresh buying, as open interest in the strike was only 966 contracts before the activity appeared.

Those calls ended today marked at $1.30, over a double in its own right but traded for as much as $2.14 earlier this afternoon, nearly 5 times their average purchase price. The stock rose 6.04% in the same time period, illustrating the kind of leverage that can be achieved quickly with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

SQ ended up 2.96% to $80.26 today. The electronic-payment service has risen along with its peers as online purchases increase as consumers continue to stay at home.