It took just three weeks for option traders to triple their money in Delta Air Lines.
On Dec. 6, Investitute’s market scanners found that 5,400 Weekly $53 calls expiring on Dec. 29 were purchased for $1.12 as part of a bullish roll with shares at $52.39. This was clearly a new positions, as open interest in the strike was only 641 contracts before that session began.
Those calls traded for $3.10 today, nearly 3 times their purchase price. The stock rose 7 percent at the same time, showing how quickly options can far outpace gains in their underlying shares. It was the second winning trade in Delta posted on Investitute this month.
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 ended today’s session off 0.55 percent at $56.12 as it continues to face resistance at all-time highs. The carrier has rallied along with other airlines and the transportation sector this holiday season.