$CARS call prices double in a day

Bullish option traders turned quick profits in Cars.com today.

Just yesterday, Investitute’s market scanners detected the purchase of 3,000 January $30 calls for $0.65 to $0.75 with shares at $28.04. Volume was well above the strike’s open interest of 2,187 contracts, indicating that this was fresh buying.

Those calls traded for $1.60 this morning, 2.5 times their original purchase price. The stock rose 7.1 percent at the same time, illustrating the kind of leverage that can be achieved through options.

Long calls lock in the price where a 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.

CARS popped 4.8 percent today to close at $29.23. The online auto marketplace rallied after Starboard reported a 9.9 percent stake in the company last night.