$PEP calls score 6-fold gains

Bullish option traders have scored exponential gains on upside positions opened in Pepsico (PEP) after its earnings report.

On Jul. 13, Market Rebellion’s Unusual Activity Service found that 8,000 July $152.50 calls, expiring today, were bought for $0.48 to $1.04 above the previous open interest of 6,247 contracts with shares at $150.83.

Those calls sold for $6.53 today, over 6 times their purchase price. The stock rose 3.76% 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.

PEP rose to an all-time high of $156.84 today and closed at $155.82, up 0.37% on the session. The snack and beverage company beat earnings and revenue estimates on Jul. 13.