Blue Apron cooked up exponential returns on bullish option positions today.
Last Wednesday, Investitute’s proprietary programs cited the purchase of 3,066 February $3.50 calls for $0.15 with shares at $3.22. This was clearly fresh buying, as open interest in the strike was only 89 contracts before the activity appeared.
Those calls traded up to $0.60 this morning, 4 times their purchase price. The stock rose 26.4% in the same time frame, a large move but nowhere near 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.
APRN jumped to $4.20 right after the opening bell but settled back to close today unchanged at $3.35. The cooking e-commerce company topped earnings and revenue estimates this morning.