Traders collected some fast money this week thanks to positive quarterly results from Yum Brands.
On Monday, Investitute’s tracking systems identified the purchase of 2,000 May $66 calls for $1.02 to $1.22 as shares traded for $65.96. Volume was above the strike’s open interest, indicating that these were new positions.
Today those calls last traded for $3, more than doubling in value just four sessions later. The stock was up less than 4.6 percent in that same period, underscoring how those contracts can 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.
YUM was up 1.07 today to finish at $68.98. The fast-food company, which operates the KFC, Pizza Hut, and Taco Bell chains, beat earnings and revenue estimates yesterday morning.