How $WTW calls soared 19-fold

Weight Watchers turned stratospheric profits for bullish option traders today.

On Nov. 13, Investitute’s tracking systems detected the purchase of 10,000 April $60 calls for $0.90 to $1.10 with shares at $42.74. This was clearly fresh buying, as open interest in the strike was only 68 contracts before the activity appeared. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for $17.48 today, 19.5 times their original purchase price. The stock rocketed 75.2% in that time, an enormous move but one that still paled in comparison to 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.

WTW surged 18.3% to $74.60 today. The weight-loss company rallied sharply after announcing a three-year strategy and revenue projections.