$AOBC bulls post 9-fold gains

It took only one session for option traders to turn enormous profits in American Outdoor Brands.

Just last Friday, Investitute’s market scanners flagged the purchase of 1,200 September $13 calls for $0.24 to $0.40 with shares at $12.65. There was no open interest in the strike before the activity occurred, showing that this was fresh buying.

Those calls traded for $2.10 today, nearly 9 times their initial purchase price. The stock rallied 18.66% 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.

AOBC was up 3.14% to $14.47 today, following a record 40% spike in the previous session. The company, parent of gun manufacturer Smith & Wesson, beat earnings and sales expectations after the market closed last Thursday.