Bulls see instant gains in $DECK

Option traders more than doubled their money overnight in Deckers Outdoor.

Late Thursday afternoon, only hours before the company reported earnings, Investitute’s proprietary systems flagged the purchase of 1,500 February $92.50 calls for $2.65. The trade was part of a bullish three-way spread with shares at $87.06.

Those calls traded for $7 yesterday morning, more than 2.5 times their purchase price less than 24 hours later. The stock rose 13% at the same time, showing how quickly options can far outpace gains in 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.

DECK spiked to a 52-week high of $98.62 yesterday morning before ending the session at $93.63, still up 7.3%. The footwear retailer beat quarterly results and raised guidance after the market closed Thursday.