$DKS calls up sevenfold overnight

Dick’s Sporting Goods spiked higher on strong quarterly numbers today, returning exponential profits on bullish option positions opened one session earlier.

Just yesterday, Investitute’s market scanners showed that 4,040 Weekly $31.50 calls expiring this Friday were bought for $1 to $1.30 above with shares at $30.62. These were clearly new positions, as open interest in the strike was a mere 95 contracts before the session began.

Those calls traded for $7.20 today, more than 7 times their initial purchase price. The stock jumped 26.5% at the same time, a large move but nowhere near that of its options.

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.

DKS surged 25.82% to $38.35 today. The retailer raised its outlook after topping earnings and revenue estimates this morning.