$NWL bulls double their money

Newell Brands continued to rise from its early June lows today, sending call prices higher.

On June 1, Investitute’s tracking systems detected the purchase of 10,200 January $23 calls for $2.40 to $2.60 with shares at $22.82. This was clearly a new position, as volume was above the strike’s open interest of 454 contracts. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for $5.40 today, more than twice their initial purchase price. The stock rose 20.6% at the same time, a huge move, but nowhere near that of its options on a relative basis.

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.

NWL was up 0.99% to close at $27.42 today. The household goods manufacturer announced on June 29 that it’s well on its way to becoming a sleeker, stronger, consumer-focused portfolio and investors have taken notice.