Bulls double their money in $TGT

Option traders are turning profits in Target ahead of quarterly results next week.

On July 5, Investitute’s tracking systems found that 2,000 Weekly $77 calls expiring on Aug. 24 were purchased for $2.66 as part of a complex spread with shares at $76.10. There was no open interest in the strike before the trade occurred, showing that it was a new positions.

Those calls traded up to $6.50 today, about 2.5 times their purchase price. The stock rose 8.88% in the same time period, showing how optinos can far outperform their underlying shares.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

TGT was up 1.55% to $82.68 today. The retail chain is scheduled to report earnings on Aug. 22 before the market opens.