Bulls rack up gains in $ZAYO

Option traders have more than doubled their money on upside positions in Zayo Group.

On March 6, Investitute’s proprietary programs flagged the purchase of 5,000 June $30 calls for $1.50 as part of a bullish spread withshares at $27.34. This was clearly a new position, as volume was well above the strike’s open interest of 3,979 contracts.

Those calls traded for as much as $3.30 today, more than twice their purchase price. The stock rose 15.73% 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.

ZAYO jumped 5.7% to close at $31.13 this afternoon. Reuters reported today that the bandwidth-infrastructure company has agreed to hold buyout talks exclusively with a consortium that includes EQT, Digital Colony, and Stonepeak Infrastructure.