$WTW bulls quadruple their money

Option traders reaped huge gains today on positions opened in Weight Watchers barely two weeks ago.

On Dec. 21, Investitute’s proprietary programs cited the purchase of 4,700 January $49 calls for $1.25 to $1.80 with shares at $47.46. These were clearly new positions, as option interest in the strike was only 394 contracts before the activity appeared.

Those calls traded for $5.33 today, more than 4 times their original purchase price. The stock rose 12.2 percent in the same time frame, showing how quickly options can far outpace gains in 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.

WTW surged 12.17 percent to $52.62 today. The weight-loss company rallied sharply after stakeholder and spokesperson Oprah Winfrey delivered a speech at the Golden Globe Awards last night that led to speculation about a presidential bid.