$UPS calls deliver quick profits

Option traders tripled their money today in United Parcel Service on the back of an analyst upgrade and change in management.

On March 1, Investitute’s market scanners found that 1,000 Weekly $108 calls expiring this Friday were purchased for $0.74. Open interest in the strike was only 296 contracts before the trade occurred, showing that it was a new position.

Those calls traded for $2.50 today, more than thrice their purchase price. The stock rose 3.9 percent at the same time, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

UPS was up 3.77% today to close at $109.80. Stifel upgraded the delivery giant to “buy” from “hold” and raised its price target to $127 from $121 this morning, saying the stock had been oversold.