$XPEV call prices charge higher

XPeng (XPEV) shares charged higher today, and bullish option traders are making gains.

On Jan. 8, Market Rebellion’s Unusual Activity Service identified the purchase of 2,000 January $52 calls for $0.78 with shares at $45.70. This was clearly fresh buying, as open interest in the strike was only 713 contracts before the activity appeared.

Those calls traded for as much as $4.05 today, over 5 times their purchase price. The stock rose 19.67% in the same time frame, illustrating the kind of leverage that can be achieved quickly with options.

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.

XPEV was up 22.41% to close at $54.30. The Chinese electric vehicle manufacturer signed agreements with five Chinese banks to provide a $2 billion line of credit.