Option traders doubled their money today in bullish positions on Twenty-First Century Fox.
On Dec. 1, Investitute’s proprietary programs cited the purchase of 2,000 January $33 calls for $1.05 as part of a bullish spread with shares at $32.29. Open interest in the strike was only 269 contracts before the trade occurred, showing that it was a new position.
Those calls traded for $2.25 today, more than double their purchase price. The stock rose 8.6 percent in the same time frame, 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.
FOXA jumped 6.5 percent to $34.88 today. The stock spiked higher after Disney confirmed that it plans to buy the media and entertainment company for more than $52 billion.