$M bulls ring up fast gains overnight

Bullish option traders are ringing up fast gains on their upside positions in Macy’s (M) today.

Just yesterday afternoon, on Dec. 20, Market Rebellion’s Unusual Activity Service detected the purchase of 4,500 Weekly $23.50 calls, expiring this Thursday, for $0.57 to $0.64 with shares at $23.21. Open interest in the strike was just 6 contracts before that session began, showing that this was fresh buying.

Those calls traded for as much as $1.30 today, at least 2 times their purchase prices.  The stock rose 6.33% in the same time period, a fast move but nowhere near that of its options 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.

M closed today up by 5.39% at $24.84.