Bullish option trades are returning exponential gains in IAC/Interactive.
Today those calls went for $21.57, a gain of roughly 700 percent. Shares have risen 29.3 percent in the same period, an impressive move but one that is nevertheless dwarfed by the stratospheric percentage advance of the calls.
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.
IAC slipped 0.23 percent today to close at $96.02, taking a breather after a huge rally. The media company gapped up from the $84 level Tuesday morning with news that it is acquiring consumer-review site Angie’s List to merge with the firm’s rival HomeAdvisor service.
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