$TAN call prices heat up

Option traders are seeing their bullish positions opened a couple of weeks ago heat up today in the Invesco Solar ETF (TAN).

On Oct. 24, Market Rebellion’s Unusual Activity Service found that 2,500 November $41 calls were bought for $0.88 above the existing open interest of 409 contracts with shares at $37.09.

Those calls have sold for as much as $2.85 today, a 223.86% return, while the stock rose 12.19% in the same time period, underscoring how 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.

TAN was last higher on the day by 3.79% at $41.30.