$STZ calls quadruple overnight

Option traders who opened bullish positions in Constellation Brands just one session earlier were reaping huge rewards by this morning.

In the last hour of yesterday’s session, Investitute’s market scanners found that 6,000 Weekly $222.50 calls expiring tomorrow were purchased in one print for $1.05 with shares at $211.03. This was clearly a new position, as open interest in the strike was only 897 contracts before the trade occurred.

Those calls sold for $4.01 this morning, nearly 4 times their purchase price. The stock rose 6.91% 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.

STZ hit a session high of $225.26 right after the opening bell today and closed at $222.10, still up 5.38% on the session. The alcoholic-beverage company topped quarterly estimates and raised its outlook before the market opened this morning.