$GDI bulls post 12-fold gains

Option traders have logged huge profits on upside positions in Gardner Denver (GDI) that expire this afternoon.

On Oct. 10, Market Rebellion’s tracking systems detected the purchase of 3,000 November $30 calls for $0.26 with shares at $27.81. Open interest in the strike was only 1 contract before that session began, showing that this was a new position.

Those calls are marked at $3.13 today, 12 times their purchase price. The stock rose 20.28% in the same time period, a large gain but nowhere near that of its options on a relative basis.

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.

GDI is up 1.36% to $33.47 in early trade today. The industrial equipment maker’s earnings beat expectations on Oct. 28, propelling more gains since we first updated the November $30 call trade on Oct. 14.