$HD call prices triple in hours

Option traders who opened bullish positions in Home Depot at lunchtime today were posting big profits by the end of the session.

Just after noon ET today, Investitute’s market scanners flagged the purchase of 2,800 Weekly $175 calls expiring tomorrow for $0.42 to $0.68 with shares at $171.43. This was clearly fresh buying, as open interest in the strike was only 689 contracts before the activity appeared. Investitute co-founder Pete Najarian cited the unusual activity in naming HD as his final trade on CNBC’s “Halftime Report,” saying the bought those calls only a few minutes earlier during the show.

Those options traded for $1.93 a minute before today’s closing bell, 3.5 times their average purchase price. The stock rose 2.64% at the same time, underscoring 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.

HD finished today up 0.38% to $175.95 after reaching a session low of $170.46. The home-improvement giant rebounded with other housing names as interest rates continued to pull back this afternoon.