$FL call buyers sprint higher

Foot Locker bulls turned significant profits on bullish positions opened only one session earlier.

Just yesterday, Investitute’s market scanners identified the purchase of 6,000 July $55 calls for $1.57 and $1.58 as part of a bullish spread with shares at $54.15. This was clearly a new position, as open interest in the strike was only 985 contracts before the trade occurred.

Those calls sold for $2.72 this morning, nearly double their purchase price. The stock rose 4.21% at the same time, showing how quickly options can far outpace gains in the 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.

FL ended today’s session down 2.63% to $52.65. The athletic-shoe retailer spiked to $56.53 early this morning as Nike surged, but shares pulled back later in the day.