$AA call buyers score more wins

Option traders Alcoa who opened bullish positions in Alcoa early today were reaping substantial profits just hours later.

This morning, Investitute’s proprietary programs flagged the purchase of 1,100 May 55 calls for $1.80 as part of a bullish roll with shares at $52.08. Volume was well above the strike’s open interest of 315 contracts, indicating that this was a new position.

Those calls traded for $3.20 this afternoon, nearly doubling in price. The stock rose 5.5% at the same time, showing how quickly options can far outpace gains in their underlying shares. It was the second winning Alcoa trade posted on Investitute in as many days.

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.

AA jumped 6.84% to $54.08 today. As noted yesterday, the aluminum producer rallied after U.S. sanctions were imposed on Russian rival United Company Rusal. Alcoa is will announce quarterly results after the market closes on April 18.