$COTY bulls post big gains overnight

It took less than 24 hours for option traders to quadruple their money in Coty.

Just yesterday afternoon, Investitute’s market scanners found that 2,000 Weekly $17.50 calls expiring tomorrow were purchased for $0.66 to $0.90 with shares at $17.45. There was no open interest in the strike before the trade occurred, showing that it was a new position.

Those calls traded up to $2.73 today, more than 4 times their original purchase price. The stock rose 15.3% at the same time, showing how quickly options can far outpace gains in their underlying shares.

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.

COTY surged 14.19% to $19.96 today. The cosmetics and fragrance company surpassed quarterly estimates on the top and bottom lines this morning.