Bulls double money in $KSS

It took less than one week for option traders to double their money on upside positions in Kohl’s (KSS).

On Oct. 7, Market Rebellion’s Unusual Activity Service found that 3,200 October $21 calls were bought for $0.45 to $0.63 with shares at $20.44. This was clearly fresh buying, as open interest in the strike was only 1,815 contracts before the activity appeared.

Those calls sold for as much as $1.40 today, more than 2 times their purchase prices. The stock rose 8.61% in the same time frame, showing how quickly options can far outperform moves in their underlying shares on a relative basis.

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.

KSS opened to a high of $22.39, but has since pulled back, last down 0.33% to $21.46 this afternoon. The retailer is estimated to next report earnings on Nov. 17.