$BA calls fly higher overnight

Option traders who opened bullish positions in Boeing (BA) yesterday morning were racking up large gains by this morning.

Less than 10 minutes after the opening bell yesterday, Market Rebellion’s Unusual Activity programs found that 4,000 Weekly $130 calls expiring this Friday were bought for $6.20 to $8.30 with shares at $123.63. Volume was well above the strike’s existing open interest of 1,944 contracts, indicating that this was fresh buying.

Those calls soared higher today, with an opening print of $25.35 less than 24 hours later and ended up trading for as much as $45.90 before noon, at least 5.5 times their purchase prices. The stock rose 39.84% at the same time, showing how quickly options can far outpace gains in 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.

BA was up 24.32% to close at $158.73 this afternoon. Shares spiked higher today after a Reuters report that the company intends to restart 737 MAX output by May.