$XPO call prices increase fourfold | Investitute

$XPO call prices increase fourfold


XPO Logistics has been hit hard with other transportation names recent, but bullish traders are still posting big profits.

On Oct. 11, Investitute’s market scanners identified the purchase of 1,434 February $70 calls for $4.90 as part of a bullish roll with shares at $68.13. This was clearly a new position, as open interest in the strike was a mere 8 contracts before the trade occurred.

Those calls were marked at $19.85 today, 4 times their purchase price. The stock rallied 32.4% at the same time, a large move but nowhere near that of their 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.

XPO jumped 4.87% to $90.20 today. The transportation-logistics company rallied sharply last December on reports that it had held talks with Home Depot about a possible deal.

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Mike Yamamoto

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