$FDX calls deliver gains

Upside call positions are delivering big gains to bullish option traders in FedEx (FDX) today.

Market Rebellion’s Unusual Option Activity Service flagged bullish option activity in the name on two separate occasions this month.

–On Jul. 13, 2,000 Weekly $160 calls expiring on Jul. 31 were purchased as part of a bullish spread for $5.06 to $5.08 above open interest of 76 contracts with shares at $158.92.
–On Jul. 27, 5,900 Weekly $170 calls also expiring on Jul. 31 were purchased for $1.02 to $2.80 above open interest of 1,017 contracts with shares at $168.40.

Those calls traded for as much as $13.80 and $4.81 so far today, respectively, more than 2.5 their average purchase prices. The stock rose as much as 9.38% 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.

FDX is up 1.08% to $171.32 in early trading today.The delivery giant, which is scheduled to report its own earnings on Sep. 15, saw its shares open higher this morning after peer UPS (UPS) reported a beat on its top and bottom lines before the opening bell today.