$PRTY on for option bulls

Option traders are scoring big gains on upside positions in Party City (PRTY) today.

On Mar. 12, Market Rebellion’s UOA Service identified the purchase of 3,000 July $8 calls as part of a bullish roll for $1.07 to $1.11 with shares at $6.52. This was clearly a new position, as open interest in the strike was only 634 contracts before the trade occurred.

Those calls chave hanged hands for as much as $2.15 this session, about 2 times their purchase prices. The stock rose 46.01% in the same time frame, illustrating the kind of leverage that can be achieved 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.

PRTY was last up this session by 15.7% to $9.22 in late afternoon trade after topping earnings estimates before the opening bell this morning.