Why $BBBY call prices doubled

Bullish option traders are racking up big profits in Bed Bath & Beyond (BBBY) today.

On Aug 22, Our proprietary programs cited the purchase of 11,500 Weekly $9 calls expiring on Sept. 6 for $0.21 to $0.30 with shares at $8.42. This was clearly a new position, as open interest in the strike was 320 contracts before that session began. Co-founder Pete Najarian cited the upside option activity at the time, on CNBC’s “Halftime Report.”

Those calls have thus far traded up to $0.58 today, more than double their average purchase price. The stock rallied 11.16% in the same time period, a large move but nowhere near that of its 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.

BBBY has jumped 9.25% on the day to $9.35 as TheDeal reports that the company has hired Goldman Sachs (GS) to run an auction process.