United Technologies propelled bullish options to stratospheric levels today.
On Nov. 22, Investitute’s tracking systems detected the purchase of 2,700 February $125 calls for $0.70 to $0.75 with shares at $116.96. Volume was well above the strike’s open interest of 1,754 contracts, indicating that this was fresh buying.
Those calls traded for $11.24 this morning, 16 times their original purchase price. The stock rose 15.9 percent 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.
UTX reached at 52-week high of $135.79 this morning before pulled back to close at $132.82, up 0.95 percent on the session. This morning Goldman Sachs upgraded the aerospace-technology company to “buy” from “neutral” and raised its price target to $173 from $124.