$MAT calls soar 6-fold in a day

Last-minute option traders collected enormous profits in Mattel today, less than 24 hours after opening their bullish positions.

Just before Thursday’s closing bell and the company’s quarterly results, Investitute’s market scanners found that 9,000 Weekly $14 calls expiring this afternoon were purchased for $0.20 with shares at $12.35. This was clearly fresh buying, as open interest in the strike was only 196 contracts before the activity appeared.

Those calls traded for as much as $1.25 this afternoon, more than 6 times their purchase price. The stock surged 23.08% at the same time, a large gain but one that was still dwarfed by the move in the shares on a relative basis. It is the second winning trade in Mattel posted on Investitute in the last month.

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.

MAT rocketed 23.22% to $15.23 today. The heavily shorted toy maker reported a surprise fourth-quarter profit after the market closed yesterday.