$MDT bulls triple their money

Medtronic yielded exponential returns on upside option positions today, thanks to strong quarterly results.

On May 14, Investitute’s tracking systems detected the purchase of 3,000 September $90 calls in one print for $2.04 with shares at $85.69. This was clearly a new position, as open interest in the strike was only 501 contracts before the trade occurred.

Those calls sold for $6 late this afternoon, about 3 times their purchase price. The stock rose 11.6% at the same time, showing how 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.

MDT jumped 5.71% to $95.17 today. The medical-device maker topped earnings and revenue estimates before the market opened this morning.