$LOW call prices soar eightfold

Option traders posted enormous profits today on bullish positions in Lowe’s .

On Dec. 14, Investitute’s market scanners identified the purchase of 2,174 March $90 calls for $2.08 as part of a bullish spread with shares at $85.75. This was clearly a new position, as open interest in the strike was only 646 contracts before the trade occurred.

Those calls ended today trading for $17.25, more than 8 times their purchase price. The stock rose 24.7% in the same time period, a large move but nowhere near that of its options. It is the second winning trade in the name posted on Investitute in as many weeks.

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.

Investitute co-founder Pete Najarian cited heavy buying in Lowe’s March $105 calls last Thursday on CNBC’s “Halftime Report.”

LOW rose 2.06% to $107.11 today. Bernstein upgraded the home-improvement chain two notches to “outperform” from “underperform” and raised its price target to $125 from $69.