$YUM calls triple in days

Option traders have more than tripled their money on bullish positions opened in Yum (YUM) earlier this week.

On Nov. 26, Market Rebellion’s Unusual Option Activity Service identified the purchase of 2,100 Weekly $100 calls expiring today for $0.06 to $0.33 with shares at $98.30. This represented fresh buying, as volume was well above the strike’s previous open interest of 378 contracts.

Those calls have traded for as much as $1.00 this morning, at least 3 times their purchase prices. The stock rose 2.75% in the same time frame, underscoring how 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.

YUM made an intraday high of $101.19 early this session but has since pulled back to trade lower by 0.31% at $100.33. The operator of restaurants including KFC, Pizza Hut, and Taco Bell, authorized an up to $2 billion share repurchase on Nov. 21.