$VZ call buyers dialing up major profits

Wireless carriers have been ripping higher, and bullish option traders are reaping enormous rewards.

On July 12, Investitute’s market scanner identified the purchase of 3,000 October $44 calls in one print for $1.08 against with shares at $43.17. This was clearly a new position, as volume was well above the strike’s open interest of 1,921 contracts.

Those calls traded up to $5.30 today, about 5 times their original price. The stock rose 14.2 percent in the same time period, 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.

VZ was up 2.6 percent to $49.34 today. The company has been climbing steadily in the last week along with other wireless carriers ahead of Apple’s next iPhone release and amid merger speculation within the industry.