Option traders racked up stratospheric gains today on upside positions opened in Delta Air Lines only two sessions ago.
On Tuesday, Investitute’s tracking systems found that 7,000 Weekly $56 calls expiring tomorrow were purchased for $0.22 to $0.31 with shares at $54.21. These were clearly new positions, as open interest in the strike was only 1,755 contracts before the activity appeared.
Those calls traded for $3.15 this afternoon, more than 14 times their original purchase price. The stock rose 9.1 percent in the same time, showing how quickly options can far outpace gains in their underlying shares. It is the fourth winning trade in Delta posted on Investitute in the last month.
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.
DAL jumped 4.76 percent to $58.52 today. The carrier blew past quarterly estimates this morning and raised 2018 earnings guidance.