$NKLA call prices power up

Nikola (NKLA) powered up for big gains on upside option positions today.

Just over 15 minutes after the opening bell yesterday, Market Rebellion’s Unusual Activity Service flagged the purchase of 4,800 June $45 calls for $4.00 to $6.80 with shares at $40.82. This was clearly fresh buying, as open interest in the strike was only 2,727 contracts before the activity appeared.

Those calls have thus far traded for as much as $43.10 so far today, at least 10 times their initial purchase price. The stock rose 117.25% in the same time frame, a huge move but nothing like that of its 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.

NKLA was last higher on the day by 9.84%, trading at $80.48. The battery-electric and hydrogen fuel-cell electric vehicle maker recently announced it would open reservations for its Badger truck on Jun. 29.