$ECA bulls double their money

Option traders have turned quick profits in Encana.

On Feb. 11, Investitute’s market scanners identified the purchase of 5,500 March $6 calls for $0.48 to $0.55 with shares at $6.07. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for as much as $1.03 this afternoon, twice their average purchase price. The stock rose 13.84% in the same time frame, showing how quickly 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.

ECA rose to $6.94 this morning but pulled back to close at $6.81, off 1.3% on the session. The oil and gas producer is expected to announce quarterly results on Feb. 28 before the market opens.