By David Russell of OptionMonster
NEW YORK -- World Wrestling Entertainment (WWE) has been running hard, and the option activity is getting extreme.
OptionMonster's tracking systems detected the purchase of more than 19,000 July 40 calls, most of which priced for $1.75. There was no previous open interest at the strike, so new money was clearly put the work.
These calls lock in the price where investors can buy a stock, letting them cheaply leverage an upside move without necessarily purchasing the shares. The options can double, triple, or more from relatively small swings in the stock price.
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This has already been happening in World Wrestling. Just two days before, traders snapped up the July 30 calls for $1.50 to $1.80. Those same contracts inflated to $4.60 by Thursday's close.
World Wrestling shares surged 10% Thursday to a new all-time closing high of $29.80. The stock has soared more than 100% in the last three months with excitement about changes in the company's television contracts and a new in-house video-streaming service.
Overall option volume was 13 times greater than average in Thursday's session. Calls accounted for a bullish 79% of the total.
Russell has no positions in WWE.