Bulls load up profits in $SWBI

Option traders are gunning for gains in upside positions in Smith & Wesson-(SWBI) today.

Just this morning, Market Rebellion’s Unusual Activity Scanners showed that 5,600 January $22.50 calls were bought for $0.20 to $0.40 above open interest of 2,153 contracts with shares of $20.36.

Those calls have traded up to $2.15 so far today, over 5 times their purchase prices. The stock rose 14.44% in the same time frame, underscoring how options can far outperform their underlying shares.

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.

SWBI was last up 19.45% at $22.72. The firearms, ammunition and restraints manufacturer set a new 52-Week high of $23.57 earlier in the session.