$TGT option bulls roam the aisles

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

On Mar. 27, Market Rebellion’s Unusual Option Activity Service identified the purchase of 5,900 Weekly $162.50 calls expiring today, Mar. 31, for $0.44 to $0.91 with shares at $157.38. The volume was well above the open interest of 1,243 contracts at the time, indicating that this was a new position.

Those calls have traded for as much as $1.75 so far today, over 2 times their average purchase price. The stock rose 4.34% 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 2.24% to $163.82 in afternoon trade.