$K call prices double in hours

Option traders who opened bullish positions in Kellogg (K) this morning were reaping exponential gains by the afternoon.

Just minutes after the opening bell, Investitute’s market scanners identified the purchase of 2,300 August $55 calls for $1.25 to $1.60 with shares at $54.40. This was clearly fresh buying, as volume was well above the strike’s previous open interest of 837 contracts.

Those calls traded up to $3.46 less than two hours later, more than twice their purchase prices. The stock rose 4.76% 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.

K is up 6.13% to $56.58 heading into the closing bell on this holiday-shortened session. The stock rallied after a Barron’s column pointed out that the food company owns the MorningStar Farms brand, which the article called “the largest single ‘fake meat’ operation in the country”–established decades before Beyond Meat’s (BYND) skyrocketing public stock debut.