$BIG bulls see large gains

Bullish option traders are logging large gains in Big Lots (BIG) today.

On Nov. 25, Market Rebellion’s Unusual Activity Service detected the purchase of 3,450 December $20 calls for $1.20 to $1.40 with shares at $19.89. Volume was well above the strike’s previous open interest of just 689 contracts, showing that this was a new position.

Market Rebellion co-founder Jon Najarian cited the unusual activity at the time on CNBC’s “Halftime Report.”

Those calls have traded for as much as $4.53 today, more than triple their purchase prices. The stock rose 23.08% in the same time period, underscoring how 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.

BIG is up 25.72% to $24.10 in midday trading. The retailer beat earnings expectations before the opening bell this morning.