$LOW call prices soar sixfold

Option traders scored huge gains today on bullish positions opened in Lowe’s less than a week ago.

On Aug. 16, Investitute’s market scanners found that 2,200 Weekly $100 calls expiring this Friday were purchased for $1.61 to $1.79 with shares at $97.91. These were clearly new positions, as open interest in the strike was only 846 contracts before the activity appeared.

Those calls traded up to $9.66 today, 6 times their initial purchase price. The stock rose 11.6% in the same time frame, showing the kind of leverage that can be achieved quickly with options.

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.

LOW jumped 5.8% to close at $105.52 today after reaching an all-time high of $109.80 earlier in the session. The home-improvement chain rallied after its new CEO announced the closure of its Orchard Supply unit and other cost-cutting measures along with quarterly results this morning.