$MCD calls soar in one-day play

Option traders collected enormous profits today on bullish positions opened in McDonald’s just 24 hours later.

Yesterday Investitute’s market scanners showed that 2,500 Weekly $165 calls expiring this afternoon were purchased for $0.30 to $1.71 with shares at $166.44. Volume was well above the strike’s open interest of 1,299 contracts, showing that this was fresh buying. Investitute co-founder Pete Najarian discussed McDonald’s on CNBC’s “Halftime Report” yesterday.

Those calls sold for as much as $6.50 this morning, more than 21 times their initial purchase price. The stock rose 3% at the same time, illustrating the kind of leverage that can be achieved quickly with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

MCD climbed to $178.70 this morning before pulling back to close at $168.91, off 0.34% on the session. The fast-food chain rallied on news of a corporate restructuring plan that includes an undisclosed number of layoffs.