$MCD call prices triple in a day

Bullish option positions opened in McDonald’s yesterday posted big gains only 24 hours later.

Investitute’s market scanners found that 1,200 Weekly $160 calls expiring on April 13 were purchased for $1.51 to $2.53 with shares at $160.35 yesterday. Volume was double the strike’s open interest, indicating that this was fresh buying.

Those calls traded for $5.37 today, more than 3.5 times their initial purchase price. The stock rose 2.6% 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.

MCD was up 1.37% to $163.95 today. The fast-food chain closed above its 50- and 200-day moving averages for the first time since the end of January.