Bulls sprint to finish line with $FL

Option traders posted significant gains in Foot Locker today.

On Nov. 30, Investitute’s tracking systems detected the purchase of 5,000 January $45 calls for $1.60 to $1.65 as part of a bullish spread with shares at $43.12. This was clearly a new position, as open interest in the strike was only 429 contracts before the trade occurred.

Those calls ended today trading for $3.90, almost 2.5 times their original purchase price. The stock rose 11.3 percent in the same time frame, reflecting the kind of leverage that can be obtained with options. Investitute co-founder Pete Najarian discussed Foot Locker at length on CNBC’s “Halftime Report” last month when the company’s stock posted its best one-day gain in 40 years.

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.

FL popped 3.65 percent to $47.98 today. The shoe retailer rallied as rival Finish Line spiked higher on strong quarterly results this morning.