Bulls score as $DE plows to new heights

Traders doubled their money on bullish positions in Deere today as shares hit all-time highs.

On Oct. 2, Investitute’s tracking systems detected the purchase of 2,800 November $125 calls for $3.65 to $4 with shares at $126.07. This was clearly fresh buying, as volume was more than double the strike’s open interest before the session began. Investitute co-founder Jon Najarian cited the unusual activity that afternoon on CNBC’s “Halftime Report.”

Those calls traded for $9 today, 2.5 times their original purchase price. The stock rose just 6.1 percent in the same time frame, underscoring 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.

DE reached a lifetime high of $133.76 this morning before pulling back in the afternoon and closing off 0.71 percent at $132.30. The tractor maker is scheduled to report earnings on Nov. 22 before the market opens.