Bulls double their money in $MET

Option traders have turned quick profits on upside positions in MetLife.

On Jan. 3, Investitute’s tracking systems detected the purchase of 10,000 February $42.50 calls for $1.23 as part of a bullish spread with shares at $41.50. Open interest in the strike was only 2,006 contracts before the trade occurred, showing that this was a new position. Investitute co-founder Jon Najarian cited the unusual activity at that time in choosing MET for his final trade on CNBC’s “Halftime Report.”

Those calls traded up to $2.86 just before today’s closing bell, about 2.5 times their purchase price. The stock rose 8.43% in the same time frame, underscoring how quickly options can far outpace gains in 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.

MET was up 0.4% to $45.05 today. BofA/Merrill upgraded the insurance giant to “buy” from “neutral” yesterday and raised its price target to $53 from $50.