Bulls rack up $BP profits at highs

BP has rallied on to multi-year highs, yielding exponential profits on upside option positions.

On Feb. 8, Investitute’s market scanners identified the purchase of 1,254 July $42 calls for $1.20 with shares at $40.58. Volume was well above the strike’s open interest of 816 contracts, indicating that this was fresh buying.

Those calls sold for $4.40 this morning, more than 3.5 times their purchase price. The stock rose 14.2% in the same time period, underscoring how option scan far outperform their underlying shares.

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.

BP was up 0.77% to $45.69 today. The U.K.-based energy giant beat quarterly estimates last week.