$HAL bulls hit a gusher

Bullish option traders turned big gains on short-term positions in Halliburton (HAL) today after its earnings report.

On Jul. 10, Market Rebellion’s Unusual Option Activity Service identified the purchase of 9,000 Weekly $12.50 calls expiring this Friday, Jul. 24, for $0.52 to $0.56 as part of a bullish spread with shares at $11.88. This represented fresh buying, as volume was well above the strike’s previous open interest of 144 contracts.

Those calls traded for as much as $1.58 this morning, roughly 3 times their purchase prices. The stock rallied 17.76% in the same time frame, showing how quickly options can far outperform 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.

HAL rose to a high of $14.14 this morning but has since pulled back to $13.70, still up 4.66% for the session. The energy-services company beat earnings-per-share expectations before the opening bell this morning.