Bulls rack up huge profits in $KORS

Michael Kors spiked higher on strong quarterly results today, returning  exponential gains on upside option positions.

On Sept. 14, Investitute’s market scanners identified the purchase of 7,500 November $47.50 calls in one print for $1.40 with shares at $44.27. Open interest in the strike was only 719 contracts before the activity appeared, showing that it was fresh buying.

Those calls rose to $7.63 today, more than 5 times their purchase price. The stock rallied 24.1 percent in the same time period, a large gain but nowhere near that of the options.

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.

KORS surged 14.7 percent to $54.62 today. The upscale apparel and handbag retailer beat earnings and revenue estimates before the market opened.