Bulls double money in $WPM

Option traders have scored exponential gains in Wheaton Precious Metals (WPM).

On Aug. 8, Our market scanners identified the purchase of 11,000 September $30 calls for $0.45 to $0.53 with shares at $27.01. This was clearly fresh buying, as open interest in the strike was only 4,258 contracts before that session began.

Those calls have traded up to $1.28 so far today, more than 2.5 times their average purchase price. The stock rose 12.37% in the same time period, illustrating the kind of leverage that can be achieved with options.

Co-founder Jon Najarian yesterday updated a winning trade in the name from CNBC’s “Halftime Report” on Aug. 26.

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.

WPM is up 1.33% to $30.47 in midday trading. The silver and gold miner has rallied with the price of precious metals in recent months.