$CPB bulls quintuple money

Option traders have racked up exponential gains in Campbell Soup.

On June 5, Investitute’s market scanners identified the purchase of 2,900 August $33 calls for $1.54 to $1.85 with shares at $33.23. This was clearly fresh buying, as open interest in the strike was only 333 contracts before that session began.

Those calls ended today’s session marked at $8.25, more than 5 times their initial purchase price. The stock rallied 24.68% in the same time period, a large move but nowhere near that of its options.

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.

CPB was up 1.3% today to close at $41.43. The stock rose after the Wall Street Journal reported that activist investor Third Point has established a stake of more than $300 million in the food company, more than 2.5% of its stock.