Option traders have doubled their money on bullish positions opened in Medtronic (MDT) this week.
On Jun. 3, Market Rebellion’s Unusual Activity Service found that 10,000 17July $80 calls were bought for $1.90 with shares at $77.94. Open interest in the strike before the trade occurred was just 1,292, showing that this was a new position.
Those calls have traded up to $4.30 today, a 126.32% return, while the stock rose 6.03% in the same time frame, underscoring how quickly 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.
MDT is up 0.18% to $82.06 in midday trading.
