Calls hit the mark with $SPWH

Sportsman’s Warehouse (SPWH) bulls have hit the mark in upside option positions.

On Mar. 13, Market Rebellion’s Unusual Activity Scanners showed that 4,250 July $5 calls were bought as part of a bullish spread for $0.81 to $0.88 with shares at $4.56. This was clearly fresh buying, as open interest in the strike was just 21 contracts before the activity appeared.

Those calls were last marked for $2.05, more than twice their purchase prices. The stock rose 53.29% at the same time, showing how quickly options can far outpace 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.

SPWH was last up 0.14% to $6.99. The outdoor sporting goods retailer beat Q4 earnings and revenue expectations on Mar. 26 and today traded as high as $7.21, above the level on Jan. 10 from when it guided lower those same earnings estimates.