$ARMK bulls triple their money

Option traders racked up huge profits on upside positions in Aramark (ARMK) today.

On July 23, Our market scanners identified the purchase of 10,000 October $37 calls for $1.52 as part of a bullish spread with shares at $35.71. This was clearly a new position, as open interest in the strike was only 466 contracts before the trade occurred.

Those calls sold for as much as $4.94 this morning, more than 3 times their purchase price. The stock rose 15.32% in the same time period, underscoring how 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.

ARMK is up 8.25% to $40.15 in afternoon trading. Shares rallied this morning after hedge fund Mantle Ridge disclosed a 20% stake in the food-services company.