Bulls score big profits in $VALE

Vale (VALE) has been rallying in recent weeks, returning big profits on upside option positions.

Back on Aug. 25, Market Rebellion’s Unusual Activity Service flagged the purchase of 5,300 December $15 calls for $0.13 to $0.14 as part of a bullish roll with shares at $11.09. Volume was above the strike’s previous open interest of 1,156 contracts, indicating that this was fresh buying.

Those calls traded for as much as $0.97 today, over 6 times their purchase prices. The stock rose 40.58% 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.

VALE is up 6.39% to $15.49 in afternoon trading. The miner is up sharply making a new 52-Week high this session.