$APC bulls drill for more gains

Anadarko Petroleum keeps paying off for upside option positions.

Investitute’s tracking systems detected bullish option activity in the same strike as part of two spreads in back-to-back sessions last month:

–On April 25, 10,000 May $72.50 calls were purchased for $1.50 with shares at $71.50.
–On April 26, 5,000 May $72.50 calls were bought for $1.76 with shares at $71.82.

Those calls traded for as much as $3.56 today, more than twice their purchase prices. The stock rose 5.93% 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.

APC was up 3.18% to $75.49 today. The oil and gas producer rallied after Occidental Petroleum raised the cash portion of its $37 billion offer to buy the company.