$URBN is a good fit for upside options

Bullish option traders have made some profitable buys at Urban Outfitters.

On Aug. 10, Investitute’s tracking systems found that 5,000 September $19 calls were purchased for $0.85 as part of a bullish roll with shares at $17.49. Open interest in strike was only 517 contracts before the trade occurred, showing that it was a new position.

This afternoon those calls sold for $2.40, nearly tripling in value. The stock rose 21.2 percent the same period, a large move but far less than that of the options on relative basis.

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.

URBN jumped 8.1 percent to $21.62 today. The mall retailer, which surged last week on strong quarterly results, last night announced the appointment of a former Google executive to its board and said it will buy back 20 million shares.