$WBT bulls score big profits

Option traders have made huge profits on bullish positions in Welbilt (WBT).

Market Rebellion’s Unusual Option Activity Service flagged bullish option activity in the name on multiple sessions over the past months:

–On Nov. 13, 3,000 June $10 calls were purchased for $1.22 to $1.35 above open interest of 2,003 contracts with shares at $8.38.

–On Dec. 9, 2,000 June $12.50 calls were bought for $1.90 above open interest of 49 contracts with shares at $11.29.

–And again on Dec. 11, 6,000 more June $12.50 calls were bought for $1.95 to $2.25 above open interest of 2,050 contracts with shares at $11.58.

Those calls have traded for as much as $12.00 and $9.70 today, at least 8.5 and 4 times their respective purchase prices. The stock rose by as much as 164.68% in the same time frame, showing 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.

WBT was last up 42.19% to $22.21 in afternoon trade. Middleby (MIDD) entered into a definitive agreement with the company, announced today, to acquire it in an all-stock transaction.