$LULU calls turn profits overnight

Bullish option traders posted substantial gains today from last-minute positions opened in Lululemon yesterday before quarterly results last night.

Just before yesterday’s closing bell, Investitute’s market scanners flagged the purchase of 3,000 Weekly $81 calls expiring tomorrow afternoon for $2.94. The position, part of a bullish spread, occurred with shares trading at $79.10.

Today those calls sold for $6.75, a gain of more than 125%. The stock rose 11% percent in the same time, illustrating the kind of leverage that can be produced 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.

LULU jumped 9.9 percent to $85.96 today. The athletic-apparel retailer beat fourth-quarter estimates on the top and bottom lines last night, noting e-commerce sales growth of 42% and Asia revenue growth of 52%.