Calls speed ahead on $THO earnings

Bullish option traders posted big profits today on strong quarterly results from Thor Industries.

On Aug. 28, Investitute’s market scanners detected the purchase of 2,500 October $110 calls for $5.40 as part of a bullish spread with shares at $108.54. This was clearly a new position, as open interest in the strike was a mere 30 contracts before the trade occurred.

Those calls traded for $13.50 today, 2.5 times their purchase price. The stock rose 14 percent in the same time period, showing 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.

THO was up 2.57 percent today to close at 123.07. The recreational-vehicle manufacturer beat earnings and revenue estimates after the market closed yesterday.