Bulls mine for profits in $AU

Option traders have more than doubled their money on upside positions in AngloGold Ashanti (AU).

On May 13, our Unusual Activity Service detected the purchase of 3,978 October $27 calls for $3.57 as part of a bullish spread, selling an equivalent amount of downside puts, with shares at $24.94. This was clearly a new position, as open interest in the strike was only a mere 28 contracts before that session began.

Those calls traded for $7.80 today, more than 2 times their purchase price. The stock rose 35.16% in the same time period, a large move but nowhere near that of its options on a relative basis.

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.

AU ended the day down 1.1% at $32.46 after trading at a new 52-Week high of $33.85 earlier in the session. The South African gold miner has rallied along with the price of precious metals, silver and gold, recently.