Boeing has been flying higher since reporting strong quarterly results last week, resulting in exponential returns on upside option positions.
Just last Wednesday, after the company reported strong quarterly results, Investitute’s market scanners detected the purchase of 4,000 August $230 calls for $1.50 to $2.30 with shares at $230.68. This was fresh buying, as open interest in the strike was only 871 contracts before the activity appeared.
Today those calls traded up to $16.11, an average gain just shy of 750 percent in less than four full sessions. The stock has risen just 6.6 percent at the same time, showing 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.
BA closed today up 0.49 percent to $242.46 after hitting an all-time high of $246.49 in the morning. The aerospace giant, which has risen sharply since surpassing earnings expectations and raising its full-year outlook. JP Morgan raised its price target on the name to $280 from $240 this morning.