$SBUX bulls score big in hours

Option traders who opened upside positions in Starbucks this morning posted huge gains by the end of the day.

Less than 5 minutes after the opening bell, Investitute’s market scanners found that 2,200 Weekly $58 calls expiring this Friday were purchased for $0.10 to $0.56 with shares at $57.71. This was clearly fresh buying, as volume was well above the strike’s open interest of 756 contracts before the activity appeared.

Those calls traded up to $2 this afternoon, about 6 times their average purchase price. The stock rose 2.37% at the same time, showing how quickly 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.

SBUX was up 2.07% to $57.71 today. The coffee giant rallied after activist investor Bill Ackman disclosed a $900 million stake in the company.