$FDX calls score quick gains

FedEx has staged an impressive comeback in recent weeks, returning large profits on bullish option positions.

On April 1, Investitute’s tracking systems detected the purchase of 3,000 18April $185 calls for $2.59 to $4.10 as part of a bullish spread with shares at $185.34. This was clearly a new position, as open interest the strike was 2,717 contracts before the trade occurred. Investitute co-founder Jon Najarian cited the unusual activity at that time after appearing on CNBC’s “Halftime Report.”

Those calls traded for as much as $8.40 today, double their average purchase price. The stock rose 3.72% in the same time frame, underscoring 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.

FDX was up 0.46% to $191.87 today. The global delivery giant pulled back after quarterly results on March 19 but has since rallied from a key support level.