$AR bulls turn large gains

Option traders posted sizable gains in Antero Resources (AR) today as shares made a new 52-Week high.

On Apr, 26, Market Rebellion’s Unusual Activity Service found that 10,600 May $11 calls, expiring tomorrow, were bought for $0.25 to $0.30 with shares at $9.27. This was clearly fresh buying, as open interest in the strike was just 5,381 contracts before the activity appeared.

Those calls traded for as much as $2.00 today, over 6 times their purchase prices. The stock rose 40.35% in the same time frame, a large move but still well below that of its options on a relative basis.

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.

AR reached a new 52-Week high of $13.19 this morning but pulled back to close at $12.72, down 1.55% on the day. The oil and natural-gas company was upgraded at Wells Fargo yesterday to Overweight from Equal Weight with a price target raised to $16 from $14.