Upside option traders tripled their money in DSW positions that expired today.
On Aug. 21, Investitute’s proprietary systems showed that 2,000 September $15 calls were purchased for $1.35 to $1.55 with shares at $15.67. This was clearly fresh buying, as open interest in the strike was only 274 contracts before the trades occurred.
Today those calls rose to $5.33, more than triple their original prices. The stock rose 30 percent in the same time period, a huge move but one that was still far below that of its options on a relative basis.
Long calls lock in the price where a 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.
DSW was up 1.7 percent today to close at $20.35, with short interest estimated at more than 17 percent of the float. The discount-shoe chain surpassed estimates on the top and bottom lines last month.