$UAA call buyers turn quick gains

Bullish option traders doubled their money overnight in Under Armour.

Just yesterday, Investitute’s tracking systems detected the purchase of 3,500 April $14 calls for $0.95 to $1.05 with shares at $14.63. These were clearly new positions, as open interest in the strike was only 819 contracts before the activity appeared.

Those calls traded up to $1.97 today, twice their original purchase price. The stock rose 8.3% at the same time, illustrating the kind of leverage that options can achieve. Investitute co-founder Jon Najarian cited even more buying in Under Armour’s May calls today on CNBC’s “Halftime Report.”

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.

UAA jumped 6.36% to close at $17.89 this afternoon. The athletic-apparel retailer today broke out of a range that has been in place since mid-February.