$EAT calls soar overnight

Traders who opened bullish options positions in Brinker International (EAT) yesterday morning are eating up huge gains this session.

Yesterday on Jun. 7, Market Rebellion’s Unusual Activity Service found that 6,800 June $65 calls were bought for $0.40 to $0.85 above open interest of just 1,483 contracts with shares at $58.60.

Those calls have traded for $2.25 so far this session, more than 2.5 times their original purchase price. The stock rose 10.82% 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 was last up 7.81% to $64.86 afternoon trade. The restaurant operator’s stock price target was raised to $83 from $80 this morning at BMO Capital.