Bulls triple money in $STNG

Option traders have scored large gains on upside positions in Scorpio Tankers (STNG).

On Nov. 19, our Unusual Activity Service showed that 2,000 January $32 calls were bought in one print for $2.25 above open interest of 882 contracts with shares at $31.55. That purchase, later reported to have been made by Scorpio President Robert Bugbee, was cited in real time by Market Rebellion co-founder Jon Najarian on our proprietary chat service and then on CNBC’s “Halftime Report.”

Those calls have traded for as much as $7.60 so far today, more than 3 times their purchase price. The stock rose 25.3% in the same time frame, underscoring how quickly 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.

STNG is up 1.8% to $39.69 in midday trading. The oil-tanker operator has rallied recently as the price of crude has rebounded.