Traders win on both sides in $NWL

Option traders made big money when Newell Brands dropped last week, and today they turned profits on the upside.

On Jan. 29, Investitute’s market scanners identified the purchase of 2,200 February $26 calls for $0.94 to $1 as part of a bullish spread with shares at $25.44. This was clearly a new position, as volume was double the strike’s open interest.

Those calls sold for $3.30 at the end of today’s session, 3.5 times their origional purchase price. The stock rose 12.9% 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.

NWL jumped 10.07% to $28.75 today. The consumer-products maker, which fell sharply after quarterly results a little over a week ago, apparently rallied this afternoon on speculation of a stake by an activist investor.