Bulls ring up more profits in $RL

Option traders posted exponential gains today in Ralph Lauren one session before their upside positions expire.

On April 27, Investitute’s market scanners showed that 2,745 Weekly $112 calls expiring tomorrow were purchased for $4.09 to $4.45 as part of a bullish spread with shares at $110.92. This was clearly a new position, as open interest in the strike was only 2 contracts before the activity appeared.

Those calls traded for $22.46 this morning, more than 5 times their purchase prices. The stock rose 21% in the same time period, a large move but nowhere near that of its options.

It was the second winning trade in the name posted on Investitute in as many days. Last week Investitute co-founder Jon Najarian cited heavy June call buying that yielded major profits as well.

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.

RL was up 1.1% to $134.80. The luxury retailer exceeded topped earnings and sales expectations yesterday morning.