$M option bulls return for more gains

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

On Dec. 23, Market Rebellion’s Unusual Activity Service detected the purchase of 3,750 Weekly $25 calls, expiring this Friday, for $0.76 with shares at $24.83. Open interest in the strike was just 2,784 contracts before that session began, showing that this was fresh buying.

Those calls traded for as much as $1.85 today, over 2 times their purchase price.  The stock rose 7.69% in the same time period, a fast move but nowhere near that of its options on a relative basis.

This marks the second winning trade in the name to be posted on Market Rebellion in the last week.

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 was last up by 1.34% in late afternoon trade at $26.16.