Call buyers hit a 10x gusher in $COG

Bullish option traders hit a gusher in Cabot Oil & Gas (COG) today.

On Aug. 27, Market Rebellion’s Unusual Activity Service found that 5,500 October $16 calls were bought for $0.60 above the existing open interest of 1,041 contracts with shares at $15.32.

Those calls sold for as much as $6.07 this afternoon, 10 times their purchase price. The stock rose 44.13% in the same time period, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

COG has rebounded sharply over the last month, closing today up 8.46% to $22.06.