$CL call prices double in hours

Colgate-Palmolive has seen highly unusual bullish option activity in the last three sessions, and traders turned quick profits today.

An hour into this morning’s trading, Investitute’s tracking systems detected the purchase of 2,000 February $62.50 calls in one print for $2.38 with shares at $61.39. This was clearly a new position, as open interest in the strike was only 543 contracts before the activity appeared. Investitute co-founder Pete Najarian cited the buying on CNBC’s “Halftime Report” a few hours later.

Those calls traded for $4.25 a few minutes before the closing bell, almost twice their purchase price, as volume nearly tripled to 5,700. The stock rose 4.1% at the same time, showing how quickly options can far outperform their underlying shares. That followed the purchase of more than 20,000 calls each in the January and February $70 strikes just since Wednesday.

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.

CL jumped 4.76% to $63.80 today, bucking the broader market’s downturn. The consumer-products company has rallied more than 11% since hitting a 52-week low of $57.41 on Oct. 29 following weak quarterly results.