$MO bulls quadruple money

Option traders scored big profits on upside positions in Altria (MO) today.

On Oct. 27, Our market scanners showed that 2,000 March $37.50 calls, expiring tomorrow, were bought for $2.72 to $2.76 with shares at $37.70. This was clearly a new position, as open interest in the strike was a mere 245 contracts before the trade occurred.

Those calls finished this session marked for $12.90, more than 4.5 times their purchase prices. The stock rose 11.58% in the same time frame, showing how quickly options can far outperform 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.

MO closed at $50.57, up 1.59% today. The cigarette and wine company topped revenue estimates in its latest earnings report on Jan. 28.