$FL bulls run with calls up sixfold

Option traders turned significant profits today on upside positions in Foot Locker opened at the beginning of the month.

On May 4, Investitute’s proprietary programs showed that 3,525 June $44 calls were purchased for $1.95 with shares at $41.81. These were clearly new positions, as open interest in the strike was a mere 628 contracts before the activity appeared.

Those calls traded for $11.95 this afternoon, more than 6 times their initial price. The stock rose 33.7% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

FL was up 20.07% to $55.70 today. The athletic-shoe retailer reported first-quarter earnings this morning with a beat on both the top and bottom lines.