Call prices jump fourfold in $BEL

Patience paid off big time for option traders with bullish positions in Belmond.

On March 15, Investitute’s market scanners cited the purchase of 5,000 September $12.50 calls for $0.90 to $1.15 with shares at $12.20. This was clearly new positioning, as open interest in the strike was onlyi 196 contracts before the activity appeared.

Those calls traded for $3.80 today, about 4 times their initial purchase price. The stock surged 31.97% 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.

BEL skyrocketed 35.43% to $15.10 today. The Bermuda-based hotel operator surpassed quarterly estimates after yesterday’s close and announced that it will consider a potential sale.