Bulls double their money in $CLF

Cleveland-Cliffs spiked to 52-week highs on strong quarterly results today, handing large gains to upside option traders.

On June 14, Investitute’s proprietary programs flagged the purchase of 10,900 July $7 calls for $1.83 to $1.88 with shares at $8.81. Volume was well above the strike’s open interest of 4,141 contracts, showing that this was fresh buying.

Those calls traded up to $3.25 today, nearly twice their initial purchase price. The stock rose 16.76% in the same time period, illustrating the kind of leverage that can be achieved with options. Investitute co-founder Jon Najarian updated the trade on CNBC’s “Halftime Report” today.

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.

CLF surged 12.67% to close at $9.96 after hitting an intraday high of $10.37, its best price in a year. The iron-ore producer, which has seen several bullish option trades in recent months, topped earnings and revenue expectations this morning.

(Disclosure: I am long CLF.)