Bulls quadruple money in $WTW

Option traders have posted enormous gains in Weight Watchers with shares at all-time highs.

On March 7, Investitute’s tracking systems detected the purchase of 2,000 July $60 calls for $7.60 to $7.80 with shares at $59.53. Open interest in the strike was only 91 contracts before that session began, showing that this was fresh buying.

Those calls were marked at $33.30 today, more than 4 times their purchase prices. The stock surged 58.2% in the same time period, a huge move but still nowhere near that of its options on a relative basis. Investitute co-founder Pete Najarian discussed the move on CNBC’s “Halftime Report” yesterday.

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.

WTW reached a lifetime high of $94.40 today before ending the session up 2.65% at $94.17. The weight-loss company rallied sharply after JPMorgan initiated coverage of the stock with an “overweight” rating and a $105 price target.