Bulls triple their money in $WTW

Upside options turned sizable profits in Weight Watchers today.

On April 3, Investitute’s market scanners identified the purchase of 3,000 May $60 calls for $5.90 to $6.30 with shares at $60.86. This was clearly fresh buying, as open interest in the strike was a mere 9 contracts before the trades occurred.

Those calls sold for $18.09 today, 3 times their original purchase price. The stock rallied 28.3% in the same time period, a large gain but still far below 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.

WTW was up 1.8% to $80.18 today. The weight-loss company rose sharply after announcing a secondary-share offering last Thursday and has continued higher since.