Option bulls $RIDE for profits

Lordstown Motors Corp (RIDE) is giving bullish option traders a ride toward profits in upside positions opened just yesterday.

Just yesterday on May 17, Market Rebellion’s UOA Service flagged the purchase of 4,200 May $9 calls for $0.15 to $0.32 with shares at $8.01. Volume was well above the strike’s open interest of 1,859 contracts, showing that this was clearly a new position.

Those calls have traded for as much as $2.00 so far today, more than 6 times their purchase price. The stock rallied 35.96% in the same time period, a huge move but still nowhere near that of its options on a relative basis.

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.

RIDE was last up by 19.16% at $10.01 in late afternoon trading.