$UAL bulls double their money

Option traders racked up large profits in United Continental today, thanks to strong quarterly results.

On March 22, Investitute’s tracking systems detected the purchase 5,000 September $90 calls for $2.59 to $2.95 as part of a bullish spread with shares at $79.38. This was clearly a new position, as volume was well above the strike’s existing open interest of 1,443 contracts. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for $6.80 today, more than twice their purchase prices. The stock rose 12.85% in the same time period, underscoring how options can far outperform their underlying shares on a relative basis.

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.

UAL jumped 4.78% to $89.24 today. The airline surpassed expectations on the top and bottom lines after the market closed yesterday.