$CZR call prices rocket sevenfold

Bullish option traders hit the jackpot in Caesars Entertainment today with last-minute bets on quarterly results.

On Oct. 31, the eve of the company’s earnings announcement, Investitute’s market scanners found that 20,000 Weekly $9 calls that expire this afternoon were purchased for $0.12 and $0.13 as part of a bullish spread with shares at $8.22. This was clearly a new position, as open interest in the strike was only 1,823 contracts before the trade occurred.

Those calls sold for $0.90 this morning, at least 7 times their purchase prices. The stock rose 13.26% in the same time frame, illustrating the kind of leverage that can be achieved quickly with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

CZR jumped 7.68% to $9.53 today. The casino operator rallied last night after posting an unexpected quarterly profit and announcing that its CEO will step down on Feb. 8.