$HON bulls rack up gains

Option traders are racking up some major gains in Honeywell (HON).

On Mar. 12, Market Rebellion’s UOA Service identified the purchase of 2,032 June $195 calls as part of a bullish roll for $15.50 with shares at $199.10. This was clearly a new position, as open interest in the strike was only 267 contracts before the trade occurred.

Those calls traded up to $37.25 this afternoon, more than double their purchase price. The stock rose 16.63% 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 0.93% to close at $230.94 today after setting a new all-time-high earlier in the session of $232.65.