BlackBerry (BB) surged higher today, yielding large returns on upside option positions opened last Friday.
On May 28, Market Rebellion’s Unusual Activity Service found that 5,000 Weekly $10 calls expiring this Friday, Jun. 4, were bought for $0.11 to $0.31 above open interest of just 1,152 contracts with shares at $8.77.
Those calls have traded up to $3.25 so far this morning, more than 10 times their purchase prices. The stock rose 50.29% at the same time, showing how options can quickly outperform their underlying shares by a wide margin.
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.
BB was last up 9.77% at $12.69 in early trading.
https://marketrebellion.com/call-prices-surge-in-bb/