$ILG call buyers turn huge profits

Option traders are posting exponential gains in bullish positions on ILG.

On Sept. 7, Investitute’s tracking systems detected the purchase of 2,000 October $25 calls for $1.05 to $1.10 with shares at $24.99. Open interest in the strike was only 652 contracts before the trades occurred, showing that they were new positions.

Those calls traded for $3.75 today, more than 3.5 times their original prices. The stock rose 14.5 percent in the same time period, an impressive move but nowhere near that of its 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.

ILG jumped 6.89 percent to $28.70 today. The company, which provides vacation membership services, surged this afternoon after Bloomberg reported that time-share giant Marriott Vacations had offered to buy ILG for $30 a share.