Call buyers are high on $LOW

Bullish option traders doubled their money in Lowe’s (LOW) today thanks to blowout earnings.

On May 31, Our market scanners identified the purchase of 3,370 January $100 calls for $5.45 to $5.50 as part of a bullish spread with shares at $93.25. Volume was above the strike’s previous open interest of 3,295 contracts, showing that this was a new position.

Those calls traded up to $13.69 today, about 2.5 times their purchase prices. The stock rose 17.58% in the same time period, underscoring how options can far outperform 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.

LOW is up 10.18% to $107.83 this afternoon. The home-improvement retailer crushed quarterly expectations this morning.