$TSLA calls power up a big win

Shares of Tesla ripped higher today, handing significant gains to upside option traders.

On Oct. 17, Investitute’s market scanners showed that 4,000 Weekly $310 calls expiring this Friday were purchased for $1.90 with shares at $277.55. This was clearly a new position, as open interest in the strike before that session began was only 1,034 contracts.

Those calls traded traded for as much as $9.91 today, more than 5 times their purchase price. The stock rose 5.67% in the same time period, a huge move but still nowhere near that of its options on a relative basis. It was the second winning trade on TSLA noted in the past week.

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 and continued to rise, closing near its highs of the session at $294.07 for a 12.69% gain on the day. The electric-car maker received bullish analyst comments from both Baird and Barclays before the market opened, and just after the opening bell Citron mentioned they were long Tesla shares into its quarterly results after the closing bell tomorrow.