Call buyers triple their money in $W

W98

Bullish traders are posting big profits in Wayfair.

On Aug. 17, Investitute’s proprietary programs cited the purchase of 1,500 September $72.50 calls for $1.75 as part of a bullish spread with shares at $68.26. Open interest in the strike was just 7 contracts before the trade occurred, showing that it was a new position.

Today those calls traded for $4.90, nearly tripling in value. The stock rose 12.9 percent in the same time period, 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.

W jumped 4.65 percent to $77.23 today. The home-furnishings retailer rallied one session after upscale furniture company RH soared nearly 45 percent on strong earnings.

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Mike Yamamoto

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