$ASH calls soar 4-fold in hours

Option traders who opened bullish positions in Ashland Global this morning were collecting huge profits by the afternoon.

About half-an hour into the session, Investitute’s tracking systems detected the purchase of 7,500 April $80 calls for $0.70 and $0.75 as part of a bullish spread with shares at $72.94. This was clearly a new position, as volume was well above the strike’s open interest of 5,077 contracts. Investitute co-founder Jon Najarian cited the unusual activity on CNBC’s “Halftime Report” today.

Those calls traded up to $2.70 just hours after they were purchased, nearly quadrupling in price. The stock rose 4.6% at the same time, underscoring 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.

ASH popped 3.48% today to close at $74.73. The chemical producer’s quarterly results are estimated to be released on April 24.