How $FOSL calls rocketed 12-fold

Fossil soared on a huge short squeeze today, turning stratospheric profits on bullish option positions opened only a week ago.

On Feb. 7, Investitute’s market scanners identified the purchase of 2,350 February $9 calls for $0.70 to $0.80 with shares at $8.65. These were clearly new positions, as open interest in the strike was only 509 contracts before the trades occurred.

Those calls traded as high as $8.23 today, roughly 12 times their original purchase price. The stock nearly doubled in the same time frame, an enormous gain but still far below that of its options on a relative basis.

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.

FOSL spiked an astounding 87.72% to close at $16.97 today. The heavily shorted fashion-watch retailer blew past earnings and revenue estimates after the market closed yesterday.