$TIF sparkles for call buyers

Bullish option traders rang up big profits in Tiffany ahead of quarterly results at the end of this week.

On Dec. 19, Investitute’s tracking systems detected the purchase of 6,800 May $90 calls for $3.35 as part of a bullish spread with shares at $77.74. This was clearly a new position, as open interest in the strike was a mere 49 contracts before that session began.

Those calls sold for $9.35 today, as part of a bullish roll, nearly 3 times their purchase price. The stock rose 25.1% in the same time period, a large move but nowhere near that of its options on a relative basis.

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.

TIF was up 0.81% to $97.34 today. The jewelry icon, which has been trending higher this year, is scheduled to report earnings on March 22 before the market opens.