$MOS bulls triple their money

Mosaic rallied this week after a strong earnings report, resulting in large gains on upside option positions.

On July 24, Investitute’s tracking systems found that 1,500 Weekly $30 calls expiring this afternoon were purchased for $0.64 to $0.75 with shares at $29.20. This was clearly fresh buying, as open interest in the strike was only 157 contracts before that session began.

Those calls traded up to $1.92 this morning, 3 times their initial purchase price. The stock rose 9.25% in the same time period, illustrating the kind of leverage that can be achieved 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.

MOS rose to $32.01 this morning before pulling back with the broader market to close at $31.49, off 1.78% on the session. Credit Suisse and CIBC raised their price targets on the name–to $26 from $25 and $37 from $31, respectively–after the fertilizer company beat quarterly expectations and issued bullish guidance on Tuesday afternoon.