Bulls finding fertile ground in $CF

Upside option positions are turning exponential profits in CF Industries.

On Sept. 6, Investitute’s tracking systems detected the purchase of 3,000 November $32.50 calls for $0.84 to $1.35 with shares at $30.64. Volume was well above the strike’s open interest of 2,044 contracts, indicating that this was fresh buying.

Those calls ended today’s session trading for $3.85, more than 4 times their original purchase price. The stock rose 16.7 percent in the same time period, illustrating how quickly options can far outperform their underlying shares. It was the second winning call trade in the name posted on Investitute in the last month.

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.

CF was up 2.66 percent today to close at $35.84. The fertilizer company, which declared a quarterly dividend of $0.30 on Tuesday, has been rebounding since early summer along with other names in a space that had languished for years.