Bulls discover a gusher with $APA

Option traders seeking upside from Apache (APA) have hit a gusher in calls opened at the end of last year.

On Dec. 31, our Unusual Activity scanners identified the purchase of 2,800 February $27.50 calls for $0.80 to $0.95 above open interest of just 457 contracts with shares at $25.32.

Those calls traded for as much as $5.97 today, at least 6 times their purchase prices. The stock rose 31.79% in the same time frame, 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.

APA is up 4.09% to $33.32 in morning trading, a new 6-Month high for the shares. The hydrocarbon explorer announced a significant offshore oil discovery last week in Suriname, and this morning saw its price target raised to $34 from $24 at Mizuho.