$COF calls double in one session

Well-timed bullish option trades are turning fast profits in Capital One Financial (COF) today.

This past Friday on Apr. 3, Market Rebellion’s Unusual Activity Service found that 5,750 May $45 calls were bought for $2.90 to $3.15, as part of a bullish combo, while selling an equivalent amount of downside puts, with shares at $40.88. This was clearly fresh buying, as open interest in the strike was 571 contracts before the session began.

Those calls traded for as much as $7.95 this afternoon, more than 2.5 times their purchase prices. The stock rose 14.87% in the same time frame, underscoring how quickly 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.

COF is up 16.50% to $49.21 in afternoon trading. The banking and credit-card company said it would not use the U.S. CFTC waiver after the recent volatility in commodity prices. As Reuters reported, a spokesperson from Capital One said the bank’s commodity exposure risk is “essentially zero, and we are subject to no outstanding margin calls.”