$EAT calls soar fivefold in hours

Traders who opened bullish options positions in Brinker International this morning collected huge gains by the afternoon.

At 11:30 a.m. ET, Investitute’s market scanners identified the purchase of 2,200 March $35 calls for $0.30 to $0.65 with shares at $33.50. These were clearly new positions, as open interest in the strike was only 662 contracts before the activity appeared.

Those calls tripled in volume and traded for $1.75 by the end of the session, more than 5.5 times their original purchase price. The stock rose less than 5% at the same time, showing how quickly options can far outpace gains 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.

EAT jumped 7.07% to $34.98 today. The restaurant operator continued rallying in the afternoon even as the broader market dropped.