McDonald’s: Fast food, quick profit

Bullish option trades in McDonald’s posted large gains today, less than two full sessions after the positions were opened.

On Friday afternoon, Investitute’s tracking systems found that 3,500 Weekly $155 calls expiring on Aug. 4 were purchased for $1.94 as part of a bullish spread with shares at $153.45. This was clearly a new position, as open interest in the strike was just 259 contracts before the trade appeared.

Those calls traded as high as $5.20 today, a profit of about 170 percent. The stock rose only 4.11 percent in the same time frame, showing how quickly options 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.

MCD popped 4.75 percent today to close at $159.07. The fast-food giant topped estimates on the top and bottom lines before the market opened.