$SBH calls up sixfold overnight

Option traders are posting huge profits on bullish positions opened in Sally Beauty (SBH) only one session earlier.

Just yesterday, Market Rebellion’s tracking systems detected the purchase of 2,350 November $17.50 calls in one print for $0.70 with shares at $16.64. Open interest in the strike was only 1,026 contracts, before the trade occurred, showing that this was a new position.

Those calls have traded for as much as $4.20 so far today, 6 times their purchase price. The stock rose 30.59% at the same time, a large move but nowhere near that of its options on a relative basis.

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.

SBH is up 22.54% to $20.39 this morning. The cosmetics company surpassed expectations on the top and bottom lines before the market opened today.