Bulls double money in $DHI

Option traders racked up large gains as D.H. Horton climbed to seven-month highs today.

On March 4, Investitute’s market scanners flagged the purchase of 4,800 May $39 calls in one print for $3.09 as part of a bullish roll with shares at $39.90. This was clearly a new position, as open interest in the strike was only 1,597 contracts before the trade occurred. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for as much as $6.30 this afternoon, more than twice their purchase price. The stock rose 12.43% in the same time period, 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.

DHI was up 2.09% to close at $44.85 after reaching a session high of $44.96 this afternoon, its highest price since Sept. 6. The stock has rallied along with shares of other homebuilders as mortgage rates have fallen.