Bulls hit a gusher in $AMLP

Bullish energy option traders have hit quite the gusher, making exponential gains on upside call positions in the Alerian MLP Fund (AMLP).

On Nov. 16, our Unusual Activity Service detected the purchase of 5,000 January $26 calls for $0.68 to $0.77 as part of a bullish roll with shares at $24.27. This was clearly fresh buying, as open interest in the strike was only 67 contracts before that session began

Those calls have traded for up to $2.22 this morning, 3 times their average purchase price. The stock rose 11.91% in the same time period, underscoring how options can far outperform their underlying shares on a relative basis.

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.

AMLP was last up by 3.84% at $27.07. The exchange-traded fund which tracks the Alerian MLP Infrastructure Index gapped higher this morning above its August levels.