$XL call prices charge up

Option traders are powering up big gains in XL Fleet (XL) as shares charged higher today.

Yesterday on Apr. 6, Market Rebellion’s Unusual Options Activity service showed that 7,500 May $10 calls were purchased for $0.75 to $0.90 with shares at $8.09, above the previous open interest of just 2,436 contracts.

Those calls sold for $3.50 today, at least 2.5 times their purchase prices. The stock rose 27.68% in the same time period, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

XL was last higher on the session at $8.76, up 4.91%. The company announced a deal with Apex this morning to electrify 19 Ford (F) pickup trucks.