Bulls double money in $SFIX

Option traders collected big profits in Stitch Fix today while staying in the name for more upside potential.

On Sept. 4, Investitute’s market scanners identified the purchase of 2,500 October $47 calls for $2.75 and $2.80 with shares at $42.05. This was clearly a new position, as open interest in the strike was a mere 11 contracts before that session began.

Those calls traded for as much as $7 today, 2.5 times their purchase prices. The stock rose 17.7% in the same time frame, showing how quickly options can far outperform their underlying shares. Investitute co-founder Jon Najarian said at least some of those calls appear to have been rolled to the October $55 strike today on CNBC’s “Halftime Report.”

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.

SFIX was up 1% to $49.33 today. KeyBanc Capital Markets increased its outlook for the online clothing retailer and raised its price target to $53 from $33 yesterday.