$TPR bulls turn fast profits

It took less than three sessions for bullish option traders to nearly triple their money in Tapestry.

On May 7, Investitute’s market scanners identified the purchase of 3,075 June $35 calls for $0.62 as part of a bullish spread with shares at $31.02. This was clearly a new position, as open interest in the strike was a mere 67 contracts before the trade occurred.

Those calls sold for as much as $1.76 this morning, almost 3 times their purchase price. The stock rose 15.25% in the same time frame, 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.

TPR opened this morning at a session high of $36.06 but pulled back to close at $33.36, still up 8.49% on the day. The retailer, formerly Coach, beat earnings results and announced a $1 billion stock buyback this morning.