$ADM bulls quintuple their money

Upside option positions in Archer Daniels Midland sprouted big profits less than three sessions after they were opened.

On Tuesday, Investitute’s proprietary programs flagged the purchase of 4,200 May $44.50 calls for $0.14 to $0.22 with shares at $44.24. These were clearly new positions, as open interest in the strike was only 1,162 contracts before the activity appeared.

Those calls traded for $0.77 this morning, 5.5 times their original purchase price. The stock rose 2.2% in the same time frame, 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 0.88% to $44.91 today. Shares rallied after management told investors yesterday that the agriculture company would be able to weather a U.S.-China trade conflict and might even benefit from one.