$THO propels bulls into fast lane

Option traders racked up enormous gains today after Thor Industries blew past earnings estimates.

On Nov. 14, Invesitute’s market scanners identified the purchase of 2,000 December $135 calls for $3.54. The trade was part of a bullish spread with shares at $130.94.

Those calls traded up to $20.50 today, nearly 6 times their purchase price. The stock rallied 18.6 percent in the same time frame, illustrating 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.

THO surged 13.3 percent to $154.37 today. Last night the recreational-vehicle maker beat estimates on the top and bottom last night with record sales.