$UPS delivers big gains to bulls

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

On Aug. 8, Investitute’s market scanners found that 3,100 Weekly $121 calls expiring this Friday were purchased for $1.16 to $1.27 with shares at $120.47. These were clearly new positions, as open interest in the strike was only 252 contracts before that session began.

Those calls traded up to $2.44 this morning, twice their purchase prices. The stock rose 3.08% 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.

UPS rose to $124.44 early this morning before pulling back to close at $122.75, off 0.89% on the session. The delivery giant surged on strong quarterly results last month and has been grinding higher since then.