$UPS calls deliver fast gains

It took just two sessions for option traders to run up exponential gains on upside positions in United Parcel Service (UPS).

On Apr. 27, Market Rebellion’s UOA service found that 4,000 Weekly $200 calls expiring tomorrow, Apr. 30, were bought for $0.45 to $1.50 with shares at $191.45. The volume was well above the contract’s previous open interest of 1,025 which indicated that this was a new position.

Those calls have traded up to $3.05 today, at least double their purchase prices. The stock rose 5.94% 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.

UPS was last up by 2.1% to $202.57 today. The package-delivery service topped earnings estimates Tuesday morning this week.