$TGT bulls hit the mark

Bullish option traders out shopping for gains hit the mark with upside option positions in Target (TGT) today.

On Aug. 10, Market Rebellion’s Unusual Option Activity Service identified the purchase of 3,500 September $135 calls  as part of a bullish roll for $5.05 with shares at $133.81. The volume was well above the open interest of 913 contracts at the time, indicating that this was a new position.

Those calls have traded for as much as $20.00 today, about 4 times their purchase price. The stock rose 15.33% at the same time, showing how quickly options can far outperform 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.

TGT was last up by 11.91% to $153.20, the retail chain announced a beat on its top and bottom lines during its quarterly earnings report this morning.