Bulls ring register on $KSS gains

Option traders more than doubled their money on upside positions in Kohl’s today.

On Oct. 4, Investitute’s proprietary programs flagged the purchase of 3,026 November $75 calls for $2.23 as part of a bullish roll with shares at $72.13. This was clearly a new position, as open interest in the strike was only 239 contracts before the trade occurred.

Those calls rose to $5.10 today, more than twice their purchase price. The stock rose 8.87% in the same time frame, underscoring how 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.

KSS popped 3.27% to close at $78.42 this afternoon. The department-store operator, which rallied along with the rest of the retail sector today, is scheduled to report earnings before the market opens on Nov. 20.