$KHC calls heat up ahead of earnings

Bullish option traders spiced things up quickly with upside positions in Kraft Heinz (KHC) today.

Just yesterday, Investitute’s market scanners identified the purchase of 2,400 August $34 calls for $0.50 to $0.55 with shares at $31.87. This was clearly fresh buying, as open interest in the strike was a mere 425 contracts before that session began.

Those calls have so far traded for as much as $1.06 today, about double times their average purchase prices. The stock has risen 3.82% in the same time period, a large move in such a short time frame but nowhere near that of its options.

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.

KHC is currently trading higher by 3.41% at $33.11 today. The food company is expected to report earnings on August 8th before the opening bell.