Option bulls 10x their money in $KSS

It took not even a week of trade for option traders to score large gains on upside positions in Kohl’s (KSS).

On Jan. 20, Market Rebellion’s Unusual Activity Service found that 2,950 Weekly $53 calls, expiring this Friday, were bought for $0.94 to $1.00 as part of a bullish roll with shares at $50.60. This was clearly fresh buying, as open interest in the strike was only 105 contracts before the activity appeared.

Those calls sold for as much as $10.22 today so far, more than 10 times their purchase prices. The stock rose 24.43% in the same time frame, showing how quickly options can far outperform moves in their underlying shares on a relative basis.

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.

KSS was last lower by 1.79% at $62.56 this afternoon.