Bulls quintuple money in $JCP

Upside option traders have rung up large profits as J.C. Penney has ridden the recent retail wave higher.

On June 6, Investitute’s proprietary programs flagged the purchase of 10,200 June $2.50 calls for $0.12 to $0.22 with shares at $2.67. This was clearly a new position, as volume was well above the strike’s open interest of 6,813 contracts. Stock 2.67.

Those calls traded for $0.66 today, more than 5 times their original purchase price. The stock rose 18.4% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

JCP was up 2.03% to $3.01 today. The struggling department-store operator has rallied in recent days as many other retail names have risen on strong quarterly results.