Call prices soar sixfold in $FOXA

Option traders collected huge profits today on bullish positions in Twenty-First Century Fox before they expired this afternoon.

On May 11, Investitute’s market scanners identified the purchase of 5,000 June $39 calls for $0.90 with shares at $37.93. Open interest in the strike was only 1,654 contracts before the trade occurred, showing that this was a new position.

Those calls sold for $6 today, more than 6.5 times their purchase price. The stock 18.7% in the same time period, 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.

FOXA was up 0.18% to close at $44.66 today after reaching a 52-week high of $45.05 late this morning. The media company rallied sharply this week on a $65 billion offer from Comcast to buy Fox’s movie studios and other assets, outbidding Disney.