$AA bulls triple money in days

Option traders who opened upside positions in Alcoa (AA) only three sessions ago are already piling up big profits.

On Feb. 3, Market Rebellion’s Unusual Activity Service flagged the purchase of 3,100 February $14.50 calls for $0.40 to $0.55 with shares at $14.30. Volume was above the strike’s previous open interest of 2,547 contracts, indicating that this was fresh buying.

Those calls have traded for as much as $1.53 so far today,more than 3 times their average purchase price. The stock rose 19.9% 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.

AA is up 7.89% to $15.86 this afternoon. The aluminum producer has rebounded since hitting a 52-week low of $13.62 at the end of last week.