$TGT calls up 6-fold overnight

Upside option traders cashed in big gains on bullish positions in Target (TGT) today.

Yesterday, Our tracking systems found that 2,310 Weekly $88 calls expiring this Friday were purchased for $2.08 to $2.13 as part of a complex bullish spread with shares at $86.67. Volume was well above the strike’s previous open interest of 1,311 contracts, indicating that this was fresh buying.

Those calls traded for as much as $12.70 thus far today, about 6 times their purchase prices. The stock rose 15.9% 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.

TGT has jumped this morning by 17.6% to $100.58, a new 52-Week, and all-time high. The retail chain topped second-quarter estimates on earnings, revenue, and raised guidance this morning.