Bulls build big $LOW gains

Option traders more than doubled their money on upside positions in Lowe’s today.

Back on Nov. 27, Investitute’s tracking systems flagged the purchase of 10,000 18April $87.50 calls for $8.80 as part of a bullish roll with shares at $90.55. Open interest in the strike was 1,600 contracts before the trade occurred, showing that this was a new position.

Those calls were marked at $20.83 this afternoon, about 2.5 times their purchase price. The stock rose 19.11% in the same time period, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

LOW was up 2.47% to $107.62 today. The home-improvement chain beat earnings expectations and reaffirmed a positive outlook.