$FIVE calls soar 11-fold overnight

Strong quarterly results led to huge profits today in bullish option positions on Five Below opened only one session earlier.

Just yesterday, Investitute’s market scanners found that 4,500 Weekly $82 calls expiring tomorrow were purchased for $1.60 to $2.19 with shares at $79.46. These were clearly new positions, as open interest in the strike was a mere 18 contracts before the activity appeared.

Those calls traded for $18.80 this afternoon, more than 11 times their original purchase price. The stock surged 26.2% at the same time, 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.

FIVE spiked higher by 21.86% to $99.05. The specialty retailer topped estimates on the top and bottom lines last night while issuing guidance that was above expectations.