GrubHub answers upside calls

GrubHub has pulled back in recent weeks, but option traders can still take large profits in the name.

Back on March 1, Investitute’s tracking systems identified the purchase of 2,100 June $37.50 calls for $$2.20 to $2.70 with sharest at $36.20. These were new positions, as open interest in the strike was only 712 contracts before that session began.

Those calls sold for $5.70 this afternoon, more than double their purchase price. The stock is up 19.4 percent in the same period, an impressive move but nowhere near the gains 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.

GRUB slipped 0.05 percent today to close at $43.47. Shares have declined since the food-delivery company hit a 52-week high of $46.83 on May 8 following strong quarterly results and guidance.