$HON bulls make big profits

Option traders have racked up exponential gains in Honeywell.

On March 13, Investitute’s proprietary programs flagged the purchase of 4,450 18April $160 calls for $1.12-$1.13 with shares at $155.03. This was clearly fresh buying, as open interest in the strike was only 3,316 contracts before that session began.

Those calls traded up to $9.45 this afternoon, more than 8 times their purchase prices. The stock rose 9.25% in the same time frame, showing how 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.

HON was up 3.78% to close at $169.06 today. The industrial manufacturer rose today after beating earnings this morning on both its top and bottom lines, as well as raising its outlook for the 2019 fiscal year.