Updated from 3:44 p.m. EDT

Investors went on a retail shopping spree Friday, bidding up

Sears

(S) - Get Report

and a host of other chain stores after real estate investment trust

Vornado

(VNO) - Get Report

fired a salvo that could spark a revolution in the sector.

Sears soared Friday after the New Jersey-based office building proprietor disclosed a leveraged ownership stake of 4.3% of Sears' common stock. The retailer's shares had their best one-day gain in two decades, rocketing up $8.70, or 23.4%, to $45.88. More than 33 million shares changed hands, compared with average daily volume of 2.5 million.

The transaction confirms a growing Wall Street fascination with the real estate holdings of the country's old-line retail chains. Other retailers gained on the news, including

Home Depot

(HD) - Get Report

, up 0.7%,

Toys R Us

(TOY)

, up 3.3%, and

Target

(TGT) - Get Report

, up 0.9%.

Vornado, which owns mostly office buildings, said it bought 1.18 million Sears common shares in July and August for an average price of $34.44 each. In addition, the company acquired an economic interest in 7.9 million more shares through a series of derivatives transactions with an unnamed financial institution.

In a filing with the

Securities and Exchange Commission

, Vornado said it bought a call option and simultaneously sold a put option with the same strike price, roughly $39.82, on Sears common shares. The position gives Vornado the same economic gain or loss as if it had purchased the underlying common stock and borrowed the strike price at a rate of Libor plus 45 basis points.

"They bought a huge call position, which they paid for by selling puts," said Barry Ritholtz, chief market strategist with Maxim Group. "Both of those are bullish bets. You're selling someone the right to sell you the stock at that level, which means you're betting it's not going lower.

"They were aware that their announcement of buying a stake in Sears would send the stock way up, so they were trading on information that their own behavior would cause," Ritholtz added. "They made a bet that they think is a good bet, and they knew that when Wall Street heard what the bet was, people would like Sears even more."

Richard Hastings, chief retail analyst with Bernard Sands LLC, said a REIT like Vornado has the ability to be a particularly shrewd investor when it comes to a retailer like Sears.

"They have Sears as a tenant in some of their retail properties," Hastings wrote in a research note. "Vornado also has other competitive, faster-growing retailers like

Kohl's

(KSS) - Get Report

as a tenant in some of their properties. Maybe Kohl's is interested in another Vornado property where Sears currently sits."

Interest in the land owned by retail chains was sparked this year when

Kmart

(KMRT)

started selling off some of its holdings, a strategy that helped the stock more than quadruple since it emerged from bankruptcy in 2003. Sears' biggest holder is Ed Lampert, the hedge fund manager who engineered the Kmart turnaround.

When Target sold its Mervyn's business unit earlier this year to an investment consortium, Vornado was a bidder, according to Christopher Capolongo, an analyst with Deutsche Bank Securities.

"We think they're bidders also for

Toys R Us

(TOY)

," Capolongo said (he does own shares in Vornado, but his firm does have an investment banking relationship with the company). Toys R Us is reportedly marketing its portfolio of toy store locations.

Vornado, which is viewed among REITs as a particularly opportunistic investor, evidently saw the chance for a Kmart-like payday in Sears.

Howard Davidowitz, chairman of Davidowitz & Associates, said that Steven Roth, the chairman of Vornado, is a savvy value investor like Lampert, and investors would be crazy to bet against him.

"He buys things that are undervalued," Davidowitz said. "That's his record. Between him and Lampert, you've got two of the smartest guys in the world with a cadaver of a retail company, but they've sold the credit card portfolio, raising a fortune. They've also paid down a lot of debt. Lampert's going to buy back a lot of shares, and they own billions of dollars worth of property."

Vornado recorded a net expense of $88,000 in the third quarter related to the Sears stake. The company said the value of the shares it owns outright was $43.7 million based on Sears' closing price of $37.18 Thursday, while the value of the shares underlying the options position was $294.4 million. Both have appreciated substantially given the run-up in the shares Friday.

Capolongo said the next big question on Wall Street is how Vornado will use its new position.

"Vornado is not a passive investor," he said. "They're an active investor."

Sears spokesman Ted McDougal said in a statement, "We are pleased that Vornado sees value in our stock. We are taking strong concerted actions to improve our full line store performance, continuing to expand our direct customer channels and building our home services business, while simultaneously pursuing aggressive off-mall growth strategy. We believe we have a sound plan to create sustainable increases in shareholder value."

Shares of Vornado closed down $1.25, or 1.8%, to $68.