Calls score again at $PG highs

Investors have flocked to the relative safety of Procter & Gamble, leading to substantial profits for upside option traders.

On Nov. 13, Investitute’s tracking systems detected the purchase of 10,000 January $95 calls for $1.68 to $1.76 as part of a bullish roll with shares at $92.92. This was clearly a new position, as volume was well above the strike’s previous open interest of 7,337 contracts. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for as much as $3.30 this morning, about twice its average purchase price. The stock rose 4.19% in the same time period, underscoring how options can far outperform their underlying shares. It was the second winning trade in PG posted on Investitute in the last month.

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.

PG hit a 52-week high of $96.89 this morning and closed at $96.64, up 0.16% on the session as the broader market sold off. Morgan Stanley upgraded the consumer-products giant to “overweight” from “equal weight” last night, with a $106 price target, citing “broad-based market share momentum, an improving gross margin outlook, and greater earnings achievability.”