$TLRY call prices light up

It took less than three sessions for upside option positions in Tilray (TLRY) to turn gains.

On Monday, Apr. 6, Market Rebellion’s Unusual Option Activity Service identified the purchase of 4,500 Weekly $7 calls expiring tomorrow, Apr. 9, for $0.17 to $0.39 with shares at $5.94. This represented fresh buying, as volume was well above the strike’s previous open interest of 2,015 contracts.

Those calls traded for as much as $0.72 this morning, more than double their average purchase price. The stock rallied 25.76% in the same time frame, showing 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.

TLRY ended today’s session higher by 9.58% at $6.98 after reaching as high as $7.55 earlier. The cannabis company’s shares rose along with its peers today as Ontario’s AG announced this morning that delivery and curbside pickup of private sector cannabis products would be allowed during their COVID-19 quarantine period.