$ADM bulls double their money

Strong quarterly results in Archer Daniels Midland have yielded a bumper crop of gains for upside options.

On June 18, Investitute’s proprietary programs flagged the purchase of 2,900 September $46 calls for $1.62 to $1.79 with shares at $45.99. These were clearly new positions, as open interest in the strike was only 722 contracts before the activity appeared.

Those calls traded for $3.65 today, more than double their purchase prices. The stock rose 7.54% in the same time period, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

ADM was up 2.56% today to $49.34. The agricultural giant blew past earnings and revenue estimates on Tuesday morning.