$DAL call prices fly higher

Upside positions in Delta Air Lines, Inc. (DAL) are flying higher today after the company’s earnings report.

On Mar. 7, Market Rebellion’s Unusual Activity scanners identified the purchase of 19,2000 April $36 calls, expiring tomorrow, for $1.12 to $1.32 with shares at $31.74. This was clearly a new position, as volume was clearly above the strike’s previous open interest of 345 contracts.

Those calls traded up to $5.06 today, roughly 4 times their purchase prices. The stock rose 29.4% in the same time frame, showing 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.

DAL was up 6.27% to $41.04 at the close.