$WBA call buyers make healthy profits

Walgreens Boots Alliance (WBA) has made a strong comeback so far this week, returning healthy gains on upside option positions.

On Aug. 25, Market Rebellion’s Unusual Activity Service found that 6,200 Weekly $50 calls, expiring this Friday, Sep. 3, were bought for $0.19 to $0.31 above the existing open interest of 1,087 contracts with shares at $48.56.

Those calls traded for $1.04 today, at least 3 times their purchase prices. The stock rose by as much as 4.65% in the time frame, underscoring 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.

WBA closed up 4.36% today at $50.75. The drugstore chain announced today that it would be increasing its starting wage for hourly team members.