Option traders tripled their money in Conagra Brands today after strong quarterly results.
On Aug. 28, Investitute’s market scanners identified the purchase of 3,500 January $33 calls for $1.75 as part of a bullish spread with shares at $32.96. Open interest in the strike was only 232 contracts before the trade occurred, showing that this was a new position.
Those calls ended today’s session marked at $5, nearly 3 times their purchase price. The stock rose 14.8 percent in the same time period, illustrating the kind of leverage that can be achieved through 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.
CAG opened at $39 this morning but pulled back to close at $37.85, down 0.76 percent on the session. The food company topped earnings and sales expectations in the pre-market.