$TSG call prices rocket fivefold

Bullish option traders hit the jackpot on The Stars Group (TSG) today.

On Aug. 13, Market Rebellion’s tracking systems detected the purchase of 4,000 November $15 calls for $0.95 with shares at $13.70. This was clearly fresh buying, as open interest was only 285 contracts before that session began.

Those calls traded for as much as $5.19 so far today, more than 5 times their purchase price. The stock surged 45.91% in the same time period, a huge move but still 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.

TSG spiked 32.66% to $20.31 in early trade today. Betting company Flutter Entertainment announced this morning that is its buying the Canadian online gaming service in an all-stock deal estimated at $6 billion.