$CZR call prices spike fourfold

Short-term bets in Caesars Entertainment have paid off big time for bullish option traders.

On May 8, Investitute’s market scanners identified the purchase of 8,500 May $12.50 calls for $0.20 to $0.25 with shares at $12. Volume was well above the strike’s open interest of 6,945 contracts, indicating that this was new positioning.

Those calls traded for $0.85 today, 4 times their purchase prices. The stock rose 11% in the same time period, showing how quickly options can far outperform 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 3.94% to $13.20 today. The company has rallied along with other casino operators after this week’s Supreme Court ruling that legalizes national sports gambling.