$KTOS bulls score big in hours

Option traders who opened upside positions in Kratos Defense & Security this morning have already doubled their money.

Less than an hour into today’s session, Investitute’s tracking systems flagged the purchase of 4,500 June $20 calls for $0.70 to $0.72 as part of a bullish roll with shares at $19.55. This was clearly fresh buying, as open interest in the strike was only 486 contracts before the activity appeared. Investitute co-founder Pete Najarian cited the unusual activity today on CNBC’s “Halftime Report.”

Those calls traded up to $1.47 late this afternoon, more than twice their purchase prices. The stock rose 5.93% at the same time, showing how quickly options can far outpace gains in their underlying shares.

It is the second winning trade in the name posted on Investitute in the last four sessions.

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.

KTOS jumped 5.3% to $20.46 today. The satellite and drone manufacturer beat quarterly expectations and gave strong guidance on May 9.