$IP bulls quadruple money

Upside option traders racked up huge gains in International Paper (IP) today.

On July 17, Investitute’s tracking systems found that 4,000 Weekly $43 calls expiring tomorrow were bought for $0.67 to $0.77 with shares at $42.50. This was clearly fresh buying, as open interest in the strike was a mere 85 contracts before that session began.

Those calls sold for as much as $2.99 today, more than 4 times their average purchase price. The stock rose 7.72% in the same time period, underscoring 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.

IP is up 3.66% to $45.74 in afternoon trading. The paper manufacturer’s earnings surpassed expectations before the market opened today.