$ZAYO bulls triple their money

It took just one session for option traders to turn big profits in Zayo Group.

Last Friday, Nov. 16, Investitute’s market scanners identified the purchase of 2,500 March $25 calls for $1.40 and $1.45 with shares at $23.12. This was clearly fresh buying, as open interest in the strike was only 79 contracts before that session began.

Those calls traded up to $4.70 this morning, more than 3 times their purchase prices. The stock rose 21.93% at the same time, a large move but nowhere near that of its options.

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.

ZAYO surged 9.84% today to close at $26 even. Shares rallied after Bloomberg reported that investors including Blackstone and Stonepeak Partners were looking into a possible bid for the network-technology company.