$XRT calls ring in 2018 profits

Option traders have more than tripled their money on upside positions opened in the SPDR S&P Retail Fund just after Thanksgiving.

On Nov. 29, Investitute’s proprietary programs cited the purchase of 30,800 January $45 calls for $0.42 to $0.83 with shares at $44.09. These represented new position, as volume was well above the strike’s open interest of 10,818 contracts.

Those calls sold for $1.51 this afternoon, more than 3.5 times their original purchase price. The stock rose less than 4.5 percent in the same time period, reflecting the type of leverage that can be obtained with options.

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.

XRT was up 1.84 percent today to close at $46.01. The retail sector has rebounded in recent months with strong holiday sales.