$CAG call buyers post big gains

$CAG call buyers post big gains

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Option traders are posting big gains in Conagra Brands Inc (CAG) today.

On Feb. 28Market Rebellion’s Unusual Activity Service found that 2,000 April $29 calls were bought for $0.66 with shares at $28.08. This was clearly fresh buying, as open interest in the strike was just 611 contracts before the activity appeared.

Those calls have sold for as much as $1.99 today, a 201.52% return, while the stock rose 9.26% in the same time period, underscoring how options can far outperform their underlying shares.

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.

CAG was last up 4.87% at $30.48.

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