$UPS delivers for call buyers

Bullish option traders doubled their money in United Parcel Service today.

On Jan. 22, Investitute’s proprietary programs flagged the purchase of 5,850 February $103 calls for $2.34 to $2.56 with shares at $102.08. There was no open interest in the strike before the trade occurred, showing that this was fresh buying.

Those calls sold for $5.30 today, more than twice their purchase prices. The stock rose 5.59% in the same time frame, underscoring how quickly options can far outpace gains in 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 up 4.16% to $105.40 today. The package-delivery giant beat fourth-quarter earnings estimates before the market opened this morning.