Traders ring the bell on $AVP

Avon Products yielded exponential gains today on bullish option positions opened only one session earlier.

Just yesterday, Investitute’s market scanners found that 8,500 Weekly $3 calls expiring on May 31 were purchased at the same second for $0.10 and $0.15 above open interest of 24 contracts with shares at $2.63. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded up to $0.33 today, more than 2.5 times their average purchase price. The stock rose 12.55% at the same time, showing how quickly options can far outpace gains in 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.

AVP was up 1.72% to $2.96. The cosmetics company is scheduled to report earnings before the market opens on May 2.