$SYF calls draw enormous profits

Strong quarterly results in Synchrony propelled upside option positions to exponential gains today.

On Sept. 18, Investitute’s tracking systems detected the purchase of 4,000 October $31 calls for $0.30 as part of a bullish spread with shares at $29.22. Open interest in the strike was only 289 contracts before the trade occurred, showing that this was a new position.

Those calls traded for $2.60 this morning, more than 8 times their purchase price. The stock rose 15 percent in the same time period, an impressive move but nowhere that of its options.

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.

SYF jumped 4.19 percent to close at $33.04 today. The credit-card company surpassed quarterly estimates on the top and bottom lines before the market opened this morning.