Call prices surge 7-fold in $SFIX

Option traders have made a killing on bullish positions in Stitch Fix.

On June 20, Investitute’s market scanners identified the purchase of 1,200 July $30 calls for $0.65 to $1.75 with shares at $25.65. Volume was well above the strike’s open interest of 519 contracts, showing that this was fresh buying.

Those calls traded for $4.90 today, more than 7 times their initial purchase price. The stock spiked more than 35% in the same time period, a huge move but nowhere near that of its options.

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.

SFIX jumped 6.01% to $32.99 today. KeyBanc initiated coverage of the clothing e-tailer with an “overweight” rating and $38 price target.