$TPR bulls score at highs

Bulls who opened upside option positions in Tapestry (TPR) last year are seeing major profits today.

Back on Oct. 19, our Unusual Activity Service found that 2,500 February $20 calls were bought for $3.00 to $3.21 above open interest of 486 contracts with shares at $20.63.

Those calls traded for as much as $16.10 today, at least 5 times their purchase prices. The stock rose as much as 74.79% in the same time frame, underscoring how quickly options can far outpace gains in 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.

TPR was up 4.6% to $36.18 at the close, a new 52-Week closing high for the retailer, which topped earnings expectations during the pre-market today.