NEW YORK -- Option traders made fast money in Container Store (TCS) as shares jumped unexpectedly at the end of last week.
OptionMonster's Heat Seeker system first detected heavy buying as 6,300 June 17.50 calls traded for 35 cents to 65 cents on Friday afternoon with the stock trading at $16.73. These were clearly new positions, as open interest in the strike was just 354 contracts before the session began.
The price of those calls doubled just 90 minutes later, turning a quick and substantial profit for subscribers of our InsideOptions Pro service. Volume in those contracts would reach 9,767 by the end of the session, dwarfing that strike's daily average of just 25 options, with premiums climbing to $1.30.
Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. That is exactly what happened in Friday's trade, as the calls gained 170% while the share price moved less than 7%.
Container Store's stock ended Friday up 9.3% to $17.87 on no apparent news after spending most of the session in negative territory. The storage-products retailer gapped down from above $21 after quarterly results on April 29 but has held support near $16, its lowest level since going public and the same area where it rebounded last October.
Total option volume in the name reached 11,275 on Friday, 10 times its daily average for the last month. Overall calls outnumbered puts by 9 to 1, a reflection of the session's bullish sentiment.
Written by Mike Yamamoto of OptionMonster
Yamamoto has no positions in TCS and didn't participate in Friday's trade.