Guess left no doubts about the strength of its quarterly results last night, handing big profits to upside option traders today.
Last Friday, Investitute’s tracking systems detected the purchase of 3,000 September $13 calls for $0.60 to $0.80 with shares at $12.79. Volume was above the strike’s open interest of 2,424 contracts, indicating that this was fresh buying.
This morning those calls traded up to $2 today, nearly tripling in value just four sessions later. The stock rose 17 percent at the same time, showing how quickly options can far outpace gains in 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.
GES surged 19.07 percent to $14.86 today. The clothing retailer blew past earnings expectations and raised its full-year outlook after the market closed yesterday.