$WMT option bulls bag up quick gains

Option traders are picking up quick gains today on upside positions opened in Walmart (WMT) just this morning.

Less than 45 minutes into the bell today, on Jul. 27, Market Rebellion’s Unusual Option Activity Service found that 4,200 Weekly $124 calls, expiring this Friday, were bought for $0.60 to $0.97 with shares at $122.00. This was clearly fresh buying, as open interest in the contract was just 1,135 before the activity appeared.

Those calls have already traded for as much as $2.15 today, at least double their purchase prices. The stock rose 2.84% 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.

WMT was last up 2.91% to $125.53 in midday trading.