$OSTK bulls triple their money

Overstock (OSTK) has been rallying for weeks, yielding exponential gains on upside option positions.

On June 27, Investitute’s proprietary programs flagged the purchase of 3,250 July $13 calls for $1.15 to $2.30 with shares at $14.53. This was clearly fresh buying, as open interest in the strike was only 351 contracts before that session began.

Those calls traded up to $5 today, about 3 times their average purchase price. The stock rallied 24.09% in the same time period, a large move but 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.

OSTK is up 14.54% to $19.06 in afternoon trading. Shares are up sharply since the online retailer announced in late June that its subsidiary tZERO had launched a digital wallet and a mobile app for cryptocurrencies. Then this morning, Overstock announced that it has partnered with Atari Movie Producers “to tokenize the first major theatrical motion picture.”