Bulls triple their money in $PG

Procter & Gamble took a breather today, but not before yielding big returns on upside option positions opened a month ago.

On June 21, Investitute’s tracking systems detected the purchase of 3,200 July $77 calls for $0.80 to $1.27 with shares at $76.67. These were clearly new positions, as open interest inthe strike was only 308 contracts before the activity appeared. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded as high as $3.10 this morning, more than 3.5 times their initial purchase price. The stock rose 4.47% in the same time period, illustrating the kind of leverage that can be achieved with options.

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.

PG spiked to $80.21 this morning before pulling back to close at $79.72, off 0.39% on the session. Shares have rallied in the last month since activist investor Nelson Peltz estimated that the consumer-products giant could be valued at 30% to 40% higher if broken up.