$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. 19, Our Unusual Option Activity market scanners showed that 4,500 September $19 calls were bought for $1.95 to $2.10 with shares at $19.74. This was clearly fresh buying, as open interest in the strike was a mere 73 contracts before the activity appeared.

Those calls have thus far traded up to $7.00 today, more than 3 times their initial purchase price. The stock rose 31.51% 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 was last higher at $25.29 up by 21.59% on the day. The retailer has spiked today after reporting a stronger quarter than expected after the closing bell yesterday.