$CLF bulls are mining gains

Bullish option traders are mining gains in upside positions opened in Cleveland-Cliffs (CLF).

On Oct. 23, Market Rebellion’s Unusual Activity Service identified the purchase of 4,600 December $11 calls for $0.22 to $0.23 with shares at $8.75. This was clearly fresh buying, as volume was well above the strike’s previous open interest of 969 contracts.

Those calls traded for as much as $1.49 so far today, more than 6 times their purchase prices. The stock rose 41.14% in the same time frame, 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.

CLF is up 4.3% to $12.36 this afternoon, setting fresh 52-Week highs.