$DAL call prices soar

Upside positions in Delta Air Lines, Inc. (DAL) are flying higher today.

On Dec. 28Market Rebellion’s Unusual Activity Service found that 10,000 February $35 calls were bought as part of a bullish roll for $1.05 to $1.08 with shares at $32.30. This was clearly fresh buying, as open interest in the strike was just 2,286 contracts before the activity appeared.

Those calls have sold for as much as $5.12 today, over 4.5 times their purchase prices. The stock rose 22.2% in the same time period, 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.

DAL was last up 3.04% at $39.34 today.

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