Calls turn profit of 1,000% in ILG

Bullish option traders have made a killing in time-share operator ILG.

On March 28, Investitute’s proprietary systems showed that 3,000 June $20 calls were purchased for $0.65 as part of a bullish roll with shares at $19.84. This was clearly a new position, as open interest in the strike was a mere 96 contracts before the trade appeared.

Those calls were last marked at $7.15, representing a gain of 1,000 percent. The stock rose about 39.7 percent in that time frame, an impressive move but one that still paled in comparison to that of the options.

Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

ILG slipped 1.56 percent to $27.71 today. The stock rose sharply after quarterly results on May 4 and surged again yesterday after Reuters reported that the company is in early-stage discussion about a possible merger.