Call prices rocket fourfold in $QSR

Bullish option traders posted substantial profits in Restaurant Brands International today.

On May 2, Investitute’s tracking systems detected the purchase of 5,100 July $55 calls for $1.60 to $1.75 with shares at $51.14. These were clearly new positions, as open interest in the strike was only 300 contracts before the trades occurred.

Those calls traded for $7.66 this morning, more than quadruple their initial purchase price. The stock rose 15.8% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

QSR was up 1.99% to $63.09 today. The Canadian multinational group of fast food chains announced this morning that it would be opening 1,500 new Tim Hortons locations in China over the next 10 years.