Call prices fly higher in $ALK

Option traders have turned large profits on bullish positions opened in Alaska Air Group, Inc. (ALK) earlier last month.

On Oct. 8, Market Rebellion’s Unusual Activity Service found that 10,000 November $45 calls were bought for $1.65 to $1.68 above the existing open interest of 245 contracts with shares at $42.83.

Those calls were last marked for $6.50 today, a 286.9% return, while the stock rose 20.8% 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.

ALK is currently trading for $51.74, up 0.23%.