Call buyers post exponential gains in $CF

CF Industries has been quietly trending higher, but upside option positions are making noise with stratospheric profits.

On Sept. 1, Investitute’s tracking systems showed that 8,200 Weekly $33 calls expiring on Sept. 29 were purchased for $0.18 to $0.25 with shares at $29.94. These were clearly new positions, as open interest in the strike was a mere 39 contracts before trades appeared.

This morning those calls sold for $2.72, more than 15 times their original price. The stock rose 18.7 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.

CF jumped 6.72 percent to $35.10 today. The company has been leading a rally in fertilizer names that has persisted for months.