Bulls feel right at $HOME

Option traders who opened upside positions in At Home (HOME) earlier this summer are harvesting profits today.

On July 15, Market Rebellion’s tracking systems detected the purchase of 3,500 January $7 calls for $1.45 to $1.50 with shares at $6.43. This was clearly fresh buying, as open interest in the strike was only 819 contracts before that session began.

Those calls sold for as much as $3.10 today, more than 2 times their purchase prices. The stock rose about 50% in the same time period, a huge move but still well below that of its options 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.

HOME is up 6.6% to $9.69 heading into today’s closing bell. The home decor chain is up sharply since reporting earnings on Sept. 4.