$CCK bulls post 10-fold gains

Crown Holdings has rebounded sharply in the last month, yielding huge returns on well-timed option positions.

On Aug. 17, Investitute’s proprietary programs flagged the purchase of 3,000 September $42 calls for $0.65 to $0.75 with shares at $40.74. This was clearly fresh buying, as open interest in the strike was a mere 23 contracts before that session began.

Those calls ended today’s session marked at $6.60, more than 10 times their initial purchase price. The stock rose 19.56% in the same time frame, 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.

CCK was up 1.56% today to close at $48.71. The September calls were purchased in the packaging company on the same day that the stock hit a 52-week low of $40.09 last month.