$VFC calls gain before earnings

Bullish option traders double their money in VF Corporation ahead of quarterly results at the end of this week.

On July 10, Investitute’s proprietary programs found that 7,000 Weekly $83.50 calls expiring on July 27 were purchased for $2.15 as part of a bullish spread with shares at $83.10. There was no open interest in the strike before the trade occurred, showing that it was a new position.

Those calls traded for $5.80 this afternoon, more than 2.5 times their purchase price. The stock rose 6.8% 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.

VFC jumped 4.67% to $88.80 today. The apparel company, whose brands include Nautica and Wrangler, was upgraded by JP Morgan this morning to “overweight” from “neutral” with a price target lifted to $105 from $85. The company is scheduled to report earnings this Friday before the market opens.