Bulls double money in $LEN

Homebuilders have been on fire all year, and Lennar (LEN) is the latest to pay off on upside option positions.

On Sept. 12, Market Rebellion’s activity scanners identified the purchase of 10,000 November $60 calls for $0.81 as part of a bullish spread with shares at $54.54. This was clearly a new position, as open interest in the strike was only 628 contracts before that session began.

Those calls traded for as much as $1.99 this morning, about 2.5 times their purchase prices. The stock rose 8.58% in the same time frame, showing 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. The

LEN is up 1.07% to $58.43 in midday trading. The homebuilder reported strong quarterly results yesterday.