$TGT calls up 4-fold overnight

Last-minute option traders cashed in big gains on bullish positions in Target today.

In the last hour of trade yesterday, Investitute’s tracking systems found that 2,400 Weekly $75 calls expiring this Friday were purchased for $0.74 to $1.05 with shares at $72.47. Volume was well above the strike’s previous open interest, indicating that this was fresh buying.

Those calls traded for as much as $4.22 today, more than 4.5 times their average purchase price. The stock rose 9.19% 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 jumped 7.78% to $77.56 today. The retail chain topped first-quarter estimates on earnings, revenue, and same-store sales before the market opened this morning.