Bulls drill for fast profits in $USO

Option traders have doubled their money in the U.S. Oil Fund.

On June 11, Investitute’s tracking systems detected the purchase of 5,000 July $13.50 calls for $0.40 as part of a bullish roll with shares at $13.41. This was clearly a new position, as open interest in the strike was only 514 contracts before the trade occurred.

Those calls sold for $0.90 today, more than twice it’s purchase price. The stock rose 6.64% in the same time frame, showing how quickly options can outpace gains in their underlying price.

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.

USO was up 3.59% to $14.27 today. The exchange-traded fund gapped higher last Friday after OPEC agreed to increase production less than feared.