$M call prices double overnight | Investitute

$M call prices double overnight


Option traders collected substantial profits just 24 hours after opening bullish positions in Macy’s.

Just yesterday, Investitute’s market scanners found that 4,000 Weekly $29 calls expiring on March 23 were purchased for $0.54 to $0.65 with shares at $28.72. Open interest in the strike was only 362 contracts before the trades occurred, showing that this was fresh buying.

Today those calls traded for $1.46, more than 2.5 times their original purchase price. The stock rose 5.1% at the same time, illustrating how quickly options can far outpace gains in their underlying shares. It is the second winning Macy’s trade posted on Investitute in as many weeks.

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.

M popped 3.69% to $29.82 today. The department-store operator rallied after strong quarterly results at the end of the last month and has held those gains.

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Mike Yamamoto

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