$GRUB bulls order in gains

Option traders are racking up big profits today on upside positions opened in GrubHub (GRUB) towards the end of last week.

On Apr. 22, Market Rebellion’s proprietary programs found that 4,500 Weekly $44 calls expiring May 1 were bought for $1.50 to $2.05 with shares at $41.88. Open interest in the strike was only 24 contracts before the trades occurred, showing that these were new positions.

Those calls traded for as much as $3.50 today, about double their average purchase price. The stock gained 12.3% at the same time, a large move but still nowhere near that of its options on a relative basis.

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.

GRUB ended up 7.43% to $46.68 today. The food-delivery service will report earnings the afternoon of May 6.