Bulls double money in $KTOS

Option traders raked in more profits on upside positions in Kratos Defense & Security (KTOS) today with shares near 52-week highs.

On May 15, Investitute’s tracking systems detected the purchase of 3,000 August $20 calls for $2.05 to $2.20 with shares at $20.46. This was clearly fresh buying, as open interest in the strike was only 582 contracts before the activity appeared. That same day on CNBC’s “Halftime Report,” Investitute co-founder Pete Najarian highlighting buying in the shorter-dated calls that also doubled in price by the end of that session.

Those calls traded up to $4.42 today, more than twice their purchase prices. The stock rose 17.25% in the same time period, underscoring how options can far outperform their underlying shares.

It is the third winning trade in the name posted on Investitute since May 10.

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.

KTOS traded up to $24.19 this morning, just shy of the 52-week peak of $24.19 reached in the previous session, but is now down 1.37% on the day to $23.76. The satellite and drone manufacturer, which beat quarterly expectations and gave strong guidance on May 9, has rallied sharply since then with the escalation of geopolitical tensions.