$KO option bulls gulp down gains

It took bullish option traders less than one week to turn huge profits in Coca-Cola Co (KO).

On Apr. 5, Market Rebellion’s Unusual Activity Service found that 6,900 Weekly $63 calls, expiring today, were bought for $0.18 to $0.50 above the existing open interest of 2,691 contracts with shares at $62.40.

Those calls traded for as much as $0.97 so far today, about 2 times their purchase prices. The stock rose 2.53% at the same time, underscoring how quickly 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.

KO was last up by 0.82% to $63.97 in afternoon trading.