$PVH call buyers sew up gains

Bullish positions in clothing manufacturer PVH have paid off handsomely for options traders.

On Feb. 28, Investitute’s market scanners identified the purchase of 3,000 April $150 calls for $4.10 as part of a bullish spread with shares at $144.58. Open interest in the strike was only 28 contracts, showing that this was a new position.

Those calls traded for $6.80 today, representing a gain of more than 65%. The stock rose 7.5% in the same time frame, illustrating how options can 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.

PVH was up 2.81% today to close at $155.16. The apparel company–whose brands include Calvin Klein, Tommy Hilfiger, Izod, and Van Heusen–topped earnings and sales estimates on March 28.