Fast Money Trades in Gap

Gap Hits Earnings Target, Raises Outlook

Fast-money traders went shopping in Gap on Monday morning.

OptionMonster's tracking programs detected unusual activity in the Weekly 30.50 calls expiring this Friday, with early buying for $0.69 and $0.70. Some 1,300 contracts had traded in the first few minutes of the session, followed by another 1,300 throughout the rest of the day.

Gap shares traded marginally higher at the time and then started to ramp higher, ending the day up 2 percent to $31.04. But that was nothing compared with the 30.50 calls, which shot up 50 percent to $1.05. That made for some fast money from a minuscule move in the stock price.

Calls lock in the price where investors can buy shares, providing tremendous leverage in the event of a rally. But if it doesn't go in the right direction, they can be rendered worthless just as quick.

The apparel retailer hit a multi-year peak near $38 in October before rolling over, and it's now trying to find support around the key $30 breakout level from the summer. The company is scheduled to report December same-store sales Thursday morning, which could provide a catalyst.

More than 21,000 option contracts changed hands in the name on Monday, about four times its daily average for the last month.

—By CNBC Contributor David Russell

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David Russell is a reporter and writer for OptionMonster. Russell has no positions in GPS.