$WMT bulls ring up quick profits

Upside option positions in Walmart tripled in value overnight.

Just yesterday, Investitute’s proprietary programs found that 6,300 Weekly $96 calls expiring this Friday were purchased for $0.20 to $0.51 with shares at $94.79. These were clearly new positions, as volume was far above the strike’s open interest of 3,274 contracts at the beginning of that session.

Those calls traded up to $1.07 this morning, 3 times their average purchase price. The stock rose 2.12% at the same time, showing how quickly options can far outperform their underlying shares. Investitute co-founder Jon Najarian also cited even more buying in the October $95 calls yesterday on CNBC’s “Halftime Report,” which were already up 33% early today.

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.

WMT rose to $96.83 early this morning but then pulled back to close at $95.64, off 0.45% on the session. The retail giant gapped up from the $90 level after reporting earnings on Aug. 16.