Foot Locker bulls run away with gains

A large trade in Foot Locker has nearly doubled in value now that the company has reported its quarterly results.

On March 21, Investitute’s tracking systems showed that 5,000 April $75 calls were purchased for $0.95 as the stock traded for $73.43. This was clearly a new position, as open interest in the strike was only 562 contracts before the trade appeared.

Those calls last traded at $1.73 today, a gain of 82 percent. Foot Locker’s shares advanced less than 4.3 percent in that same time, highlighting the kind of leverage that can be achieved with options.

Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. But the contracts can quickly lose value if the stock stalls or pulls back.

FL rose 5.37 percent today to close at $76.55. The shoe retailer initially fell after its pre-market earnings report but reversed higher when the company pointed to strong April sales.