Option traders are posting large profits on upside positions opened in Burlington Stores (BURL) less than 24 hours ago.
On Nov. 20, Market Rebellion’s Unusual Option Activity Service found that 2,750 Weekly $150 calls, expiring Nov. 24, were bought for $2.79 to $2.80 with shares at $137.17. This was clearly fresh buying, as open interest in the contract was just 43 before the activity appeared.
Those calls traded for as much as $14.70 today, a 425% return, while the stock rose 19.98% in the same time period, underscoring how options can far outperform their underlying shares.
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.
BURL was last up by 20.24% at $164.38 in morning trade.