$UWMC bulls turn fast profits

UWM Holdings (UWMC) has rallied sharply today, turning fast profits for bullish option traders.

On Mar. 2, Market Rebellion’s Unusual Activity Service found that 5,300 March $9 calls were bought for $0.30 to $0.65 with shares at $8.05. This was clearly fresh buying, as open interest in the strike was only 3,705 contracts before the activity appeared.

Those calls have traded up to $3.50 so far today, over 5 times their purchase prices. The stock rallied 50.81% 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.

UWMC was last at $9.85 this afternoon, up 8.11 % on the day for the wholesale mortgage lender after reaching $12.45 earlier in the session.