$CPRI bulls see gains

Option traders are seeing gains on upside positions in Capri (CPRI) today after its earnings report.

On Oct. 23, Market Rebellion’s Unusual Option Activity Service identified the purchase of 2,600 November $22 calls for $2.10 to $2.44 with shares at $22.55. This represented fresh buying, as open interest in the strike before that session was a mere 88 contracts.

Those calls traded for as much as $4.15 this morning, about double their purchase prices. The stock rose 15.48% in the same time frame, illustrating how options can far outperform moves in their underlying shares on a relative basis.

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.

CPRI reached a session high early of $26.08 but has since pulled back, currently down 0.87% to $25.06. The apparel retailer topped earnings estimates yesterday after the closing bell.