Bulls cash in on fast $LL move

Short-term option traders tripled their money in Lumber Liquidators before their upside positions expired this afternoon.

On April 15, Investitute’s tracking systems detected the purchase of 4,500 18April $11.50 calls for $0.15 to $0.40 as part of a bullish spread above open interest of 29 contracts with shares at $11.36. Investitute co-founder Jon Najarian cited the unusual activity at that time on our proprietary chat service.

Those calls traded for as much as $0.80 this afternoon, about 3 times their average purchase price. The stock rose 8.27% in the same time frame, 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.

LL jumped 6.53% to $12.23 today. The discount lumber retailer rallied this morning after investor Whitney Tilson abandoned his longtime short position inthe name and went long instead.