$BHGE calls quintuple in price

Bullish traders collected huge profits on Baker Hughes options that expired this afternoon.

On March 8, Investitute’s tracking systems detected the purchase of 3,700 April $31 calls for $0.76 to $1 with shares at $29.52. Volume was well above the strike’s open interest of 1,345 contracts, indicating that this was fresh buying. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls sold for $3.85 today, 5 times their initial purchase price. The stock rose 18.2% in the same time period, emphasizing how options can far outperform their underlying shares.

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.

BHGE was up 0.83% to close at $33.99 today. The oilfield-service company topped earnings expectations this morning.