Bulls wake up to profits in $HLT

Upside option traders turned substantial profits in Hilton Worldwide today as the stock rallies ahead of its earnings report next week.

On June 28, Investitute’s proprietary programs showed that 5,036 July $80 calls were bought for $0.70 with shares at $76.92. This was clearly new positioning, as open interest in the strike was only 1,420 contracts before the activity appeared.

Those calls traded up to $3.10 today, nearly 4.5 times their original purchase price. The stock rose 7.98% in the same time frame, illustrating the kind of leverage that options can achieve. Investitute co-founder Jon Najarian also cited heavy buying in August calls today on CNBC’s “Halftime Report.”

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

HLT was up 2.23% to $82.96 today. The global hospitality company has been edging higher since its June 28 low, and just yesterday morning Deutsche Bank issued a positive note ahead of the company’s earnings report slated for July 25 before the market opens.