$TAP bulls drink up profits

Molson Coors (TAP) is bubbling higher today, and bullish option traders are drinking up profits.

On Sep. 24, Market Rebellion’s Unusual Activity Service identified the purchase of 5,300 October $35 calls for $0.50 to $0.65 with shares at $33.13. This was clearly fresh buying, as open interest in the strike was only 506 contracts before the activity appeared.

Those calls have traded for as much as $1.20 today, about double their purchase prices. The stock rose 6.07% in the same time frame, illustrating the kind of leverage that can be achieved quickly with options.

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.

TAP was last up 0.94% at $33.88 in afternoon trade. The brewing company announced this morning that it would be bringing Coca-Cola’s (KO) Topo Chico to the U.S. in a hard-seltzer version.