Calls post sixfold increase in $WMT

Option traders scored enormous gains in Wal-Mart Stores today as shares hit all-time highs.

On Oct. 9, Investitute’s tracking systems detected the purchase of 2,500 January $80 calls for $2.90 as part of a bullish combination trade. The stock was $80.02 at that time.

Those calls traded for $19.50 at the end of today’s session, more than 6.5 times their purchase price. The stock rallied 24.2 percent at the same time, a large move but one that was dwarfed by gains in its options on a relative basis.

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.

WMT jumped 10.9 percent to close at $99.62 today, minutes after reaching a lifetime high of $99.68. The retail giant easily beat quarterly expectations and raised its outlook this morning.