$WBA call prices surge fivefold

Walgreens Boots Alliance has made a strong comeback this month, returning huge profits on upside option positions.

On July 3, Investitute’s tracking systems showed that 2,000 Weekly $61.50 calls expiring this afternoon were purchased for $1.33 as part of a complex bullish spread with shares at $60.90. This was clearly a new position, as open interest in the strike was a mere 12 contracts before the trade occurred.

Those calls sold for $6.60 today, 5 times their purchase price. The stock rose 12.27% in the time frame, underscoring how quickly 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.

WBA was up 1.63% today to close at $68.64. The drugstore chain’s shares plunged after quarterly results in late June but have rebounded sharply along with large stock purchases by the company’s CEO, according to Investitute co-founder Pete Najarian.