$CTL call buyers dial up profits

Option traders tripled their money in CenturyLink less than a week after opening upside positions in the company.

Last Friday, Investitute’s tracking systems detected the purchase of 40,000 June $18 calls for $0.60. The trade was part of a bullish spread with shares at $15.70.

Today those calls traded up to $2, more than 3 times their purchase price. The stock rose 23.9% in the same time frame, illustrating how 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.

CTL jumped 8.82% to $19.13 today. Last night the broadband reported quarterly results that were boosted by business from its acquisition of Level 3 Communications.