$ARMK pays off again for bulls

Option traders quadrupled their money on upside positions in Aramark (ARMK) today for the second session in a row.

On May 9, Investitute’s tracking systems detected the purchase of 2,200 June $35 calls for $0.25 and $0.30 with shares at $31.34. This was clearly fresh buying, as open interest in the strike was a mere 24 contracts before that session began.

Those calls sold for $1.20 today, more than 4 times their purchase prices. The stock rose 11.97% in the same time period, showing how options can far outperform their underlying shares.

It is the second winning trade in the name posted on Investitute in as many days.

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 reached a session high of $35.60 this morning before pulling back to close at $34.79, off 0.29% on the day. The stock spiked yesterday after Reuters reported that investment firm Mantle Ridge may be interesting in acquiring the food company.