$HD call prices triple in hours

Option traders who opened bullish positions in Home Depot (HD) yesterday morning are already posting big profits.

Just yesterday, Market Rebellion’s Unusual Activity Service found that 5,300 Weekly $222.50 calls expiring this Friday were bought for $0.15 to $0.40 with shares at $220.07. This was clearly a new position, as open interest in the strike was just 3,166 contracts before that session began.

Market Rebellion co-founder Pete Najarian cited the unusual activity at the time on CNBC’s “Halftime Report.”

Those options have traded for as much as $1.21 this afternoon, more than 3 times their purchase prices. The stock rose 1.22% at the same time, underscoring 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.

HD today is up 1.00% to $222.90. The home-improvement giant has rebounded sharply this week since it’s decline post-earnings on Nov. 19.