Macerich has seen consistently bullish option activity for months, and today those trades paid off in a big way.
On Oct. 6, Investitute’s tracking systems identified the purchase of 2,500 November $60 calls for $1.10 as part of a bullish roll with shares at $56.43. Volume was well above the strike’s open interest of 1,080 contracts, showing that this was a new position.
Those calls traded up to $5.20 this afternoon, nearly 5 times their purchase price. The stock rose 15.1 percent in the same time frame, an impressive move but nowhere near that of its options on a 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.
MAC jumped 7.42 percent to $62.41 today. The stock spiked higher midday after Bloomberg reported that hedge fund Third Point has built a position of nearly 5 percent in the mall real-estate investment trust and could seek a sale of the company.