$UNIT bulls turn quick gains

Option traders who opened upside positions in Uniti Group yesterday were logging large profits today.

Just yesterday, Investitute’s tracking systems detected the purchase of 11,800 October $20 calls for $0.85 to $1.05 with shares at $19.27. These were clearly new positions, as open interest in the strike was only 226 contracts before the activity appeared. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded up to $2.05 this morning, twice their purchase prices. The stock rose 7.32% 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.

UNIT was up 0.99% to $20.44 today. The communications real-estate investment trust is scheduled to present at Goldman Sachs’ annual Communacopia Conference on Friday.