Calls on track for $CSX profits

Option traders tripled their money on bullish positions in CSX today.

On Feb. 13, Investitute’s market scanners flagged the purchase of 2,600 May $75 calls for $1.75 as part of a bullish roll with shares at $71.28. This was clearly a new position, as open interest in the strike was only 1,005 contracts before the trade occurred.

Those calls sold for as much as $5.71 today, more than 3 times their purchase price. The stock rose 12.56% in the same time period, showing how optoins 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.

CSX was up 4.02% to $78.94 today. The railroad operator beat earnings and revenue estimates after the market closed yesterday.