Bulls mine big profits in $SBGL

Option traders have more than doubled their money on upside positions in Sibanye-Stillwater (SBGL).

On Oct. 29, Market Rebellion’s Unusual Activity Service flagged the purchase of 7,100 December $7.50 calls for $0.45 to $0.50 with shares at $7.08. This was clearly fresh buying, as open interest in the strike was a mere 88 contracts before that session began.

Those calls traded for as much as $1.15 so far today, more than twice their purchase prices. The stock rose 21.47% 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.

SBGL is up 3.34% to $85.12 this morning. The South African precious-metals miner has rallied sharply since the end of summer.