$APA bulls triple their money

Apache has rallied with the rest of the energy sector recently, yielding major returns on upside option positions today.

On March 21, Investitute’s tracking systems detected the purchase of 3,200 April $38 calls for $1 to $1.25 with shares at $37.25. This was clearly fresh buying, as volume was more than twice the strike’s open interest of 1,527 contracts.

Those calls traded for $3.55 today, more than 3.5 times their original purchase price. The stock rose 11.6% in the same time period, showing how options can far outpace gains in their underlying shares.

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.

APA was up 1.37% to $41.35 today. The natural-gas and oil producer has been climbing steadily off 52-week lows from the beginning of March. Earnings are scheduled for release on the morning of May 3.