$CSX calls turn quick gains at highs

Option traders have doubled their money on bullish positions opened in CSX just last week.

On Aug. 6, Investitute’s tracking systems cited the purchase of 6,000 August $72.50 calls in one print for $0.50 with shares at $71.43. This was clearly a new position, as volume was well above the strike’s open interest of 1,323 contracts.

Those calls traded up to $1.15 this morning, more than double their purchase price. The stock rose 1.31% in the same time frame, showing how quickly options can far outpace gains in 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.

CSX was down 0.73% today to close at $73.16. The railroad operator hit an all-time high of $73.98 yesterday after blowing past quarterly expectations on the top and bottom lines.