$SGMS call prices double

Scientific Games gave bullish option traders the opportunity to cash in on upside option positions opened earlier this year today.

On Jan. 3, Investitute’s market scanners found that 5,000 Weekly $22 calls expiring on April 18 were purchased for $2 as part of a bullish spread with shares at $17.71. Volume was well above the strike’s open interest of 237 contracts, showing that this was clearly a new position.

Those calls traded for $4.60 today, more than 2 times their purchase price. The stock rallied 34.39% in the same time period, a huge move but still 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.

SGMS jumped to $23.89 in early trading before pulling back to close off 2.22% to $23.37 today. The Las Vegas-based casino and lottery equipment manufacturer has rallied sharply off 52-Week lows made on Dec. 21.