Call buyers bank on $COF

Well-timed bullish option trades are turning profits in Capital One Financial (COF) today.

On Sep. 19, Market Rebellion’s Unusual Activity Service found that 3,154 December $155 calls were bought for $7.74 with shares at $149.99. This was clearly fresh buying, as open interest in the contract before the activity appeared was just 93.

Those calls have sold for as much as $17.44 today, a 125.32% return, while the stock rose 11.71% 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.

COF was last up 5.60% to $161.85.