Cheap bets pay off big in $CZR

It took only a few sessions for bullish option traders to ring up exponential profits in Caesar’s.

On Jan. 9, Investitute’s market scanners found that 3,000 Weekly $8 calls expiring this afternoon were purchased for $0.15 with shares at $7.75. This was clearly fresh buying, as open interest in the strike was a mere 124 contracts before the activity appeared.

Those calls traded for as much as $1 this morning, more than 7 times their purchase price. The stock rose 11.23% in the same time frame, showing how quickly options can far outpace gains in 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.

CZR jumped 9.01% to $8.71 today. Shares rallied after CNBC reported that billionaire Carl Icahn is building a stake in the casino operator.