$SWK bulls measure big profits

Bullish option positions opened ahead of Stanley Black & Decker’s earnings report delivered solid profits today.

On July 19, Investitute’s tracking systems found that 1,250 Weekly $139 calls expiring this afternoon were purchased for $2.70 as part of a bullish spread, with shares at $137.67. Volume was above the strike’s open interest of 5 contracts, indicating that this was fresh buying.

Those calls ended today’s session with an intrinsic value of $6.90, more than 2.5 times their initial purchase price. The stock rose 5.99% in the same time frame, illustrating the kind of leverage that can be achieved quickly 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.

SWK rose 0.93% to close at $145.90 today. The hand- and power-tool manufacturer reported beat quarterly estimates on July 20 and reaffirmed guidance for the rest of its fiscal year.