Housing bulls score in $BLDR

Option traders have reaped large profits in Builders FirstSource.

On Oct. 31, Investitue’s tracking systems detected the purchase of 7,500 November $13 calls in one print for $0.50 with shares at $12.40. This was clearly a new position, as open interest in the strike was a mere 99 contracts before the activity appeared.

Those calls sold for $1.15 today, more than twice their purchase price. The stock rose 13.47% in the same time frame, showing how 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.

BLDR was up 1.13% to $13.86 today. The housing-materials supplier beat earnings and revenue estimates after the market closed on Nov. 1.