$AES calls generate gains

Bullish option traders’ upside call positions are generating gains today in AES Corporation (AES).

On Jan. 27, our Unusual Activity Service found that 2,300 February $25 calls were bought for $0.35 to $0.40 above open interest of 638 contracts with shares at $23.04.

Those calls traded up to $2.09 so far today, over 5 times their purchase prices. The stock rose 16.54% at the same time, illustrating the kind of leverage that can be achieved quickly 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.

AES was last up 2.71% to $26.88 in midday trade. The electric power distribution company is scheduled to report earnings before the market opens on Feb. 25.