$PLAY call prices soar sixfold

Bullish option traders are scoring exponential gains in Dave & Buster’s (PLAY) today.

On Dec. 16, Market Rebellion’s Unusual Activity Service found that 2,400 Weekly $41 calls expiring on Jan. 24 were bought for $0.90 to $1.20 with shares at $39.62. This was clearly fresh buying, as open interest in the strike was a mere 6 contracts before that session began.

Those calls are marked at $6.45 this morning, more than 6 times their average purchase price. The stock rose 19.36% in the same time period, underscoring how options can far outperform 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.

PLAY is up 12.01% to $47.09 this morning. The entertainment and restaurant chain rallied today after private-equity firm KKR (KKR) reported that it has increased its stake in the company to 6.3%.