Bulls quintuple money in $CPB

Option traders collected huge profits in Campbell Soup amid merger speculation.

On June 14, Investitute’s tracking systems detected the purchase of 4,700 August $38 calls for $0.90 to $1.20 with shares at $36.54. These were clearly new positions, as open interest in the strike was only 1,767 contracts before the trades occurred.

Those calls sold for $5.20 today, more than 5 times their initial purchase price. The stock rose 16.9% in the same time frame, 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.

CPB jumped 9.4% to $42.23 today. Shares surged this morning on a New York Post report that Kraft Heinz may be considering a bid for the food and beverage company.