$WSM call prices spike 9-fold

Bullish option traders rang up enormous profits in Williams-Sonoma today.

On Aug. 13, Investitute’s market scanners identified the purchase of 2,802 September $62.50 calls for $1.24 as part of a bullish spread with shares at $58.02. Open interest in the strike was only 182 contracts before the activity appeared, showing that it was a new position.

Those calls sold for as much as $10.90 at the end of today’s session, about 9 times their purchase price. The stock rose 25.9% in the same time frame, a large move but nowhere near that of its options.

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.

WSM soared 16.5% to close at $72.94 today, just off a new 52-week high of $73.22 reached a few minutes earlier. The cooking-products and furniture retailer beat earnings and revenue estimates after the market closed yesterday.