Bulls triple money in $BBBY

Bed Bath & Beyond (BBBY) rallied on the appointment of a new CEO today, yielding exponential gains on upside option positions.

On Aug. 29, Market Rebellion’s activity scanners identified the purchase of 5,000 October $11 calls in one print for $0.60 with shares at $9.39. Open interest in the strike was a mere 132 contracts before the trade occurred, showing that this was a new position.

Those calls traded for as much as $1.89 today, more than 3 times their purchase price. The stock rose 35.14% 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.

BBBY is up 23.74% to $12.30 this morning. Last night the home-products retailer announced the appointment of former Target (TGT) executive Mark Tritton as chief executive officer effective Nov. 4.