$TSLA calls win big overnight

Shares of Tesla opened higher this morning, delivering significant gains to upside option positions opened only one session earlier.

Just yesterday, Investitute’s market scanners showed that 4,000 Weekly $280 calls expiring on Oct. 26 were purchased for $6.07 as part of a bullish spread with shares at $269.11. This was apparently a new position, given past trading histories cited by Investitute’s market scanners. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded traded for as much as $11.66 today, nearly double their purchase price. The stock surged 11.39% in the same time period, a huge move but still 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.

TSLA gapped higher this morning to $282.70 before pulling back to close down 1.74% on the session at $271.78. The electric car maker’s CEO, Elon Musk, disclosed that he would be purchasing another $20 million worth of stock.