It took only 24 hours for bullish option traders to ring up exponential profits in Target.
Just yesterday, Investitute’s tracking systems found that 2,100 Weekly $59.50 calls that expired this afternoon were purchased for $0.16 to $0.62 with shares at $59.70. These were clearly new positions, as open interest in the strike was only 242 contracts before the trades occurred.
This morning those calls sold for $2.03, more than 12 times their original purchase price. The stock was up less than 3.1 percent at the same time, showing how quickly 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.
TGT was up 1.1 percent today to close at $60.85. The retail giant rallied on news that it was teaming up with the Google Express online shopping service.