Traders who bought calls in Best Buy earlier this week have already quadrupled their money.
On Monday, Investitute’s market scanners identified the purchase of 3,000 June $50 calls for $3.10 to $3.20 with shares at $51.59. Volume was almost doubled the strike’s open interest of 1,603 contracts, indicating that this was fresh buying.
Those calls traded as high as $11.93 this afternoon, resulting in a profit of nearly 300 percent in just four sessions. The stock rose less than 20 percent in the same time frame, underscoring the kind of leverage that can be achieved through options.
Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.
BBY surged 21.48 percent today to close at $61.25. The electronics retailer blew past earnings estimates in its quarterly report before the market opened.