$DOV bulls double their money overnight

Dover Corp. spiked higher today on the back of a better-than-expected earnings report delivered yesterday morning, handing quick profits to bullish option positions opened 24 hours before.

Just yesterday, Investitute’s tracking systems detected the purchase of 1,249 August $80 calls for $0.85 to $1.00 with shares at $77.62. This was clearly a new position, as open interest in strike was only 103 contracts before that session began.

Those calls sold for $2.25 this afternoon, more than double their purchase price. The stock rose 4.15% in the same time frame, showing how 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.

DOV spiked higher by 2.71% today to close at $80.24, pulling back after reaching a 3-month high of $81.485 earlier in the session. Shares have rallied after the specialty equipment manufacturer reported its Q2 earnings before the open yesterday, beating on both the top and bottom lines.