How $KSS calls rocketed sixfold

Bullish option traders are ringing up huge profits in Kohl’s.

On Nov. 30, Investitute’s proprietary programs cited the purchase of 5,000 January $55 calls for $0.57 to $0.65 with shares at $49.24. These were clearly new positions, as open interest in the strike was only 291 contracts before the activity appeared.

Those calls traded for $3.85 this afternoon, more than 6.5 times their original purchase price. The stock rose 15.9 percent in the same time period, underscoring how options can far 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.

KSS jumped 5.98 percent to $56.87 today. The department-store operator has rallied along with other retailers amid rising optimism over the holiday-shopping season.