$TAN call prices sizzle

Option traders have seen their gains sizzle on upside positions in the Invesco Solar ETF (TAN).

On Dec. 15, Market Rebellion’s Unusual Activity tracking systems detected the purchase of 3,000 Weekly $100 calls expiring on Dec. 31 for $0.98 to $1.05 as part of a bullish roll with shares at $90.74. Volume was well above the strike’s previous open interest of 56 contracts, showing that this was fresh interest.

Those calls traded up to $6.20 today, about 6 times their purchase prices. The stock rose 14.92% in the same time period, a large move but nowhere near that of its options 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.

TAN ended the session up 3.56% at $103.13 this afternoon. The ETF, which tracks the investment results of the MAC Global Solar Energy Index, made new multi-year highs this session.