Bulls quadruple money in $KHC

Option traders are scoring large gains on upside positions in Kraft Heinz (KHC) ahead of its earnings report later this week.

On Jul. 2, Market Rebellion’s Unusual Activity Scanners showed that 2,700 Weekly $33 calls expiring this Friday, Jul. 31, were bought for $0.59 to $0.62 as part of a bullish roll with shares of $31.83. This was clearly fresh buying, as open interest in the strike was only 327 contracts before the activity appeared.

Those calls traded for as much as $2.60 today, at least 4 times their purchase prices. The stock rose 10.87% in the same time frame, illustrating how quickly options can far outperform their underlying shares.

It is the second winning trade in the name to be posted on Market Rebellion in as many weeks.

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.

KHC was last up on the session by 1.34% at $35.31. The food company is scheduled to report earnings on Jul. 30 before the market opens.