$KORS shopping spree pays off for bulls

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Bullish traders racked up huge gains in Michael Kors for the second time this week.

On July 25, Investitute’s market scanners found that 2,200 Weekly $36.50 calls that expired this afternoon were purchased for $1.05 to $1.10 with shares at $34.72. These were clearly new positions, as open interest in the strike was a mere 12 contracts before the activity appeared.

Today those calls traded for $8.21, representing a profit of more than 660%. The stock rallied 28.8 percent in the same period, a large gain but still well below that of the options on a relative basis. It was the second winning upside trade in KORS posted on Investitute since Tuesday.

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.

KORS closed today’s session down 1.04 percent at $44.69 but had traded as high as $45.77 this morning. The luxury handbag and apparel retailer surpassed quarterly expectations and raised guidance earlier this week.

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Mike Yamamoto | Investitute

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