$DE bulls post 12-fold gains

Option traders collected enormous profits on upside positions in Deere that expired this afternoon.

On Dec. 26, Investitute’s proprietary programs flagged the purchase of 2,000 January $145 calls in two prints for $1.47 and $1.85 with shares around $137.95. Volume was well above the strike’s open interest of 1,174 contracts, indicating that this was fresh buying.

Those calls traded for $20.55 today, more than 12 times their average purchase price. The stock rose 19.96% in the same time period, a large move but nowhere near that of its options. Investitute co-founder Jon Najarian cited the move in DE on CNBC’s “Halftime Report” today.

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.

DE was up 2.84% to $164.61 today. The farming-equipment manufacturer has rallied with agricultural concessions by China in its trade negotiations.