Why $VOYA calls exploded higher

It took just two sessions for upside option positions to turn exponential gains in Voya Financial.

On Tuesday, Investitute’s market scanners identified the purchase of 2,000 February $50 calls in one print for $0.55 with shares at $46.13. This was clearly a new position, as open interest in the strike was a mere 43 contracts before the trade occurred.

Those calls rose for $3.64 this afternoon, more than 6.5 times their purchase price. The stock gained 13.3 percent in the same time frame, showing 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.

VOYA jumped 11.19 percent to $52.07 today. The financial-services company spiked higher this morning after announcing that it is selling most of its annuities business to a group of private-equity firms for an estimated $1.1 billion.