$MSG calls score big overnight

Madison Square Garden resumed its surge higher today, handing huge profits to upside option positions opened one session earlier.

Just yesterday, Investitute’s tracking systems detected the purchase of 1,250 July $320 calls for $4.10 with shares at $314.01. This was clearly a new position, as volume was well above the strike’s open interest of 68 contracts.

Those calls traded for $9.20 today, more than double their purchase price. The stock rose 3.66% at the same time, illustrating the kind of leverage that can be achieved 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.

MSG jumped 2.59% to $327.30 today. The live-entertainment-events company has been climbing since June 27, when it announced that its management team is exploring possible spin-offs to unlock shareholder value.