$UAA calls post quick gains

Option traders doubled their money in Under Armour just two sessions after opening bullish positions in the name.

On Wednesday, Investitute’s tracking systems flagged the purchase of 4,400 July $23 calls for $0.86 to $1.17 with shares at $23.31. Open interest in the strike was only 247 contracts before the trade occurred, showing that it was a new position. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for $1.83 today, more than twice their initial purchase price. The stock rose 4.63% in the same time frame, underscoring how 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.

UAA ended today’s session down 3.97% to close at $22.48. The athletic-apparel retailer jumped to $24.42 early in the morning after rival Nike surged with strong quarterly numbers, but shares pulled back during the rest of the day.