$TJX call buyers ring up big profits

Traders more than tripled their money in TJX today thanks to positive quarterly results.

On Jan. 9, Investitute’s market scanners identified the purchase of 3,100 March $77.50 calls for $2.05 as part of a bullish roll with shares at $75.62. Open interest in the strike was a mere 14 contracts before the trade occurred, showing that this was a new position.

Those calls traded for $7.30 today, 3.5 times their original purchase price. The stock rose 12.1% in the same time frame, illustrating the kind of leverage that can be achieved 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.

TJX jumped 6.95% to $82.68 today. The discount retailer rallied after earnings and sales surpassed expectations this morning.