Call prices take flight in $BA

Option traders who opened bullish positions in Boeing (BA) just two sessions ago were rewarded with profits today as call prices fly higher.

On Nov. 16, Market Rebellion’s Unusual Activity programs found that 26,000 November $200 calls were bought for $2.65 to $4.85 with shares at $197.67. Volume was well above the strike’s existing open interest of 19,595 contracts, indicating that this was fresh buying.

Those calls traded for as much as $24.95 so far today, at least 5 times their purchase prices. The stock rose 12.48% in the same time period, showing how options can far outpace gains in 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.

BA was last down on the session by 1.63% at $206.62 after opening to a high of $223.02 earlier this morning. The Federal Aviation Administration yesterday announced that it had ruled that Boeing’s 737 MAX can safely return to the skies with fixes.