Option traders rang up fast profits today in Wal-Mart Stores.
On Wednesday, Investitute’s tracking systems found that 3,500 Weekly $97 calls expiring on Dec. 1 were purchased for $0.63 to $0.94 with shares at $96.43. This was clearly fresh buying, as volume was well above the strike’s open interest of 1,683 contracts.
Those calls traded for $1.40 this morning, more than double their original purchase price. The stock rose less than 0.5 percent at the same time, illustrating the kind of leverage that can be achieved through options. It was the second winning trade in Wal-Mart posted on Investitute in just over a week.
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.
WMT was up 0.22 percent today to close at $96.62. This morning SunTrust reported that the discount chain was seeing heavier traffic than other retailers, adding that malls were generally more crowded than they had been in years for “Black Friday” shopping.