$CSCO calls double in an hour

Bullish option positions opened in Cisco Systems this morning posted significant profits well before noon.

Early in today’s session, Investitute’s market scanners flagged the purchase of 5,500 18April $57 calls for $0.19 to $0.30 with shares at $57.05. This was clearly fresh buying, as open interest in the strike was only 982 contracts before the activity appeared.

Those calls traded for as much as $0.67 less than an hour later, more than twice their purchase prices. The stock rose less than 0.81% at the same time, showing how quickly options can far outpace gains in their underlying shares.

It is the second winning trade in the name posted on Investitute in as many weeks.

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.

CSCO was up 0.77% to $85.17 today. This morning Goldman Sachs downgraded the networking giant to “buy” from “conviction buy” but raised its price target to $62 from $58.