Home Depot calls go through roof

Bullish option positions returned exponential profits today after Home Depot reported strong quarterly results.

On April 10, Investitute’s tracking systems detected the purchase of 25,000 May $155 calls in one print for $0.61 as shares traded for $147.29. This was clearly a new position, as the volume far exceeded the strike’s open interest of 3,096 contracts at the beginning of that session.

Those calls traded up to $6.46 this morning, a gain of more than 950 percent. The stock rose less than 9 percent in that same period, showing how far options can 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.

HD was up 0.59 percent to close at $158.26 today after reaching an all-time intraday high of $160.86 in the morning. The home-improvement giant beat earnings and sales estimates before the market opened.