Bulls cool off with $CARR gains

Carrier Global (CARR) shares have been heating up since their spin-off from United Technologies Corp. and bullish option traders are cooling off with gains.

On Jun. 3, Market Rebellion’s Unusual Activity Service detected the purchase of 3,400 September $22.50 calls for $2.00 to $2.30 with shares at $22.04. Volume was well above the strike’s previous open interest of just 484 contracts, showing that this was a new position.

Those calls traded for as much as $7.50 today, more than 3 times their purchase prices. The stock rose 35.48% 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.

CARR ended higher on the session by 1.02% to $29.79. The heating, ventilating and air conditioning manufacturer beat earnings estimates in its most recent second quarter report.