$CWH bulls pack in profits

It took less than a week for option traders to post substantial profits in Camping World (CWH).

Last Friday on May 15, Market Rebellion’s Unusual Option Activity Service identified the purchase of 2,500 June $21 calls for $0.29 to $0.50 with shares at $15.99. This represented fresh buying, as volume was well above the strike’s previous open interest of 262 contracts.

Those calls traded up to $2.20 today, at least 4 times their purchase prices. The stock rose 30.64% at the same time, showing how quickly options can outpace moves 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.

CWH jumped 7.25% to $20.70 today. The recreational-vehicle services company’s shares have since bottoming in mid-March.