$WSM calls soar 11-fold in a day

Strong quarterly numbers propelled huge profits for option traders with upside positions in Williams-Sonoma.

Just yesterday, Investitute’s market scanners identified the purchase of 4,400 June $52.50 calls bought for $0.35 to $0.75. Volume was above open interest at the time, showing that this was fresh buying, with shares at $49.07.

Those calls traded for $4.03 today, more than 11 times their initial purchase price. The stock rose 14% at the same time, showing how quickly 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.

WSM jumped 5.65% to $51.96 today. The cooking-products and furniture retailer blew past earnings estimates and raised its outlook after the market closed yesterday.