Patience pays in Weight Watchers

A bullish option trade in Weight Watchers is turning enormous profits five months after it was opened.

Way back on March 1, Investitute’s market scanners identified the purchase of 2,000 January $15 calls for $3.06 as part of a bullish roll with shares at $16.63. This was clearly a new position, as volume was well above the strike’s open interest of 1,361 contracts.

Today those calls traded for as much as $27, a gain of more than 780 percent. Weight Watchers’ shares soared 153 percent in the same period, illustrating how options can outperform their underlying stock even when it posts huge gains of its own.

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.

WTW spike higher by 25.12 percent today to close at $41.39. The weight-loss company surpassed earnings expectations and raised its full-year outlook before the market opened.