$BBBY bulls check out with profits

Option traders are cashing in major profits on bullish positions in Bed Bath & Beyond (BBBY) today.

On Sep. 24, Market Rebellion’s Unusual Activity Service flagged the purchase of 3,750 October $17 calls for $0.51 as part of a bullish roll with shares at $14.15. Open interest in the strike was only 219 contracts before the trade occurred, showing that this was a new position.

Those calls are marked for $7.00 this morning, about 14 times their purchase prices. The stock rose 70.11% in the same time period, illustrating how options can far outperform moves in their underlying shares on a relative basis.

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.

BBBY is up 8.69% to $24.07 this morning. The home-products retailer announced after the close yesterday that it would be selling its Christmas Tree Shops banner and Institutional Linens Holdings for about $250 million as part of its ongoing optimization of its portfolio.