Bulls hit gusher with $DO at highs

It took just three days for bullish options traders to more than double their money in Diamond Offshore Drilling.

Last Friday, Investitute’s market scanners identified the purchase of 5,200 June $22.50 calls in one print for $0.20 with shares at $18.94. above open interest of 2,739 contracts. Stock 18.94. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for $0.48 this afternoon, nearly 2.5 times their purchase price. The stock rose 10.6% in the same time frame, illustrating the kind of leverage that can be achieved with options.

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.

DO reached a 52-week high of $20.98 today before pulling back late in the session to close at $19.74, off 0.83%. The offshore driller has rallied as the price of oil has climbed to multi-year highs.