$APA calls triple in two days

Apache has had a strong move with the rest of the energy sector recently, handing quick profits to upside option positions today.

On Tuesday, Investitute’s tracking systems detected the purchase of 1,400 Weekly $44 calls expiring tomorrow for $0.57 to $0.63 with shares at $43.68. This was clearly fresh buying, as volume was well above the strike’s open interest of 236 contracts.

Those calls traded for as much as $1.94 today, more than 3 times their original purchase prices. The stock rose 5.1% in the same time frame, showing how options can far outpace gains in their underlying shares. It was another winning trade for APA bulls this quarter as energy stocks continued their rise.

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.

APA opened to an intraday high of $46.30 before pulling back to consolidate and close up by 0.11% to $45.94. The natural-gas and oil producer has been on the rise with West Texas Intermediate crude hitting new multi-year highs.