$FDX bulls double their money

FedEx is trading at new highs as it recovers from the recent twin hurricanes, and option traders have been reward for sticking with their upside positions.

On Sept. 20, Investitute’s tracking systems detected the purchase of 5,200 October $222.50 for $1.85 to $3.20 with shares at $219.51. These were clearly new positions as open interest was just 60 contracts before the trades occurred. Investitute co-founder Jon Najarian cited the unusual option activity on CNBC’s “Halftime Report” at that time.

Those calls sold for $5.70 today, double their original purchase price. The stock rose only 1.6 percent in same time frame, underscoring 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.

FDX hit a new 52-week high of $226.34 this morning before closing at $225.58 in the afternoon, up 0.59 percent. The winning call trades were opened the day after the delivery giant reported quarterly results.