$URBN bulls post quick gains

It took barely a week for option traders to double their money on upside positions in Urban Outfitters (URBN).

On Aug. 20, Our market scanners showed that 2,150 Weekly $21.50 calls expiring on Sept. 6 were bought for $1.10 to $1.20 with shares at $20.95. This was clearly fresh buying, as open interest in the strike was a mere 8 contracts before the activity appeared.

Those calls are marked at $2.18 today, about twice their initial purchase price. The stock rose 12.46% 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.

URBN reached a session high of $24.09 this morning but pulled back with the broader market to $23.49 in midday trading, off 0.25% on the day. The retailer rebounded on strong sales Aug. 20.