Bulls score huge gains in $W

Option traders have already more than doubled their money on long-dated call positions in Wayfair (W).

On Mar. 30, Market Rebellion’s proprietary Unusual Activity programs flagged the purchase of 3,000 January *2022* $80 calls in one print for $12.70 with shares at $48.81. This was clearly fresh buying, as open interest in the strike was only 304 contracts before that session began.

Those calls traded for as much as $29.00 today, more than double their initial purchase price in under three weeks. The stock has moved higher by 57.61% in the same time period, a large move but nowhere near 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.

W ended the session higher by 8.33% at $77.47. The online home-goods retailer was upgraded to a Buy from Neutral at BofA this morning, which also raised its price target on the shares to $103 from $89, following on the company’s announcement yesterday morning that it expects to exceed its Q1 revenue growth guidance.