$SGMS call prices soar fivefold

Bullish option traders hit the jackpot in Scientific Games today.

Investitute’s market scanners found that a total of 4,500 July $50 calls were purchased on consecutive sessions April 11 and 12 for $2.35 to $2.50 as part of a bullish spread with shares at $42.55 and $43. Volume was well above the strike’s open interest on both occasions, showing that these were new positions.

Those calls traded for $13 this afternoon, more than 5 times their purchase prices. The stock rallied 44.5% in the same time period, a huge move but still nowhere near that of its options on a relative basis. Investitute co-founder Pete Najarian cited SGMS on CNBC’s “Fast Money” this evening.

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 10.68% to $59.05 today after the Supreme Court ruled that sports gambling is legal nationwide. The casino-technology company had recently announced developments in sports-betting platforms in domestic and overseas locations, including New Jersey, Switzerland, and Hungary. Investitute posted huge winning option trades in the name last year.