$VFF calls harvest more gains

Option traders more than quadrupled their money on upside positions in Village Farms (VFF) today.

On Nov. 17, Market Rebellion’s activity scanners detected the purchase of 8,300 December $9 calls for $0.30 to $0.51 above open interest of 328 contracts with shares at $7.98.

Those calls traded for as much as $2.25 today, at least 4 times their purchase prices. The stock rose 36.2% in the same time period, a large move but nowhere near that of its options on a relative basis.

It was the third winning trade in the name since Nov. 17.

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.

VFF traded up to $11.43 this morning but closed at $10.11, down 11% on the day. On Nov. 25, the hydroponic vegetable greenhouse business announced that its cannabis subsidiary, Pure Sunfarms, entered into an agreement to supply products to Shoppers Drug Mart.