$CZR call prices soar 7-fold

Bullish option traders hit the jackpot today in Caesars Entertainment (CZR).

On June 14, Investitute’s tracking systems found that 2,500 Weekly $10 calls expiring this Friday were bought for $0.27 to $0.30 with shares at $9.82. This was clearly fresh buying, as open interest in the strike was only 314 contracts before the activity appeared.

Those calls traded for as much as $2.10 this morning, more than 7 times their average purchase price. The stock rose 17.11% in the same time frame, 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.

CZR is up 14.56% to $11.44 this afternoon. The stock spiked higher on news that Eldorado Resorts (ERI) is buying the rival casino operator for an estimated $17.3B.