Bulls rack up fast $BP profits

BP (BP) has rallied alongside crude today, yielding exponential profits on upside option positions.

On Nov. 2, Market Rebellion’s Unusual Activity tracking systems detected the purchase of 8,500 November $18 calls for $0.13 to $0.15 shares at $16.17. This was clearly new position as the volume was well above the previous open interest of 3,803 contracts, indicating fresh buying.

Those calls sold for $1.09 this morning, more than 7 times their purchase prices. The stock rose 15.65% in the same time period, underscoring how options can 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 last up 16.69% to $18.25 today. The U.K.-based energy giant has seen its shares lift higher alongside the price of crude, which has rebounded sharply over the last several sessions.