Bulls triple money in $VALE

Vale (VALE) has been rallying off 52-week lows in recent weeks, returning big profits on upside option positions.

On Sept. 4, Investitute’s proprietary programs flagged the purchase of 5,900 October $13 for $0.09 and $0.10 with shares at $11.20. Open interest in the strike was a mere 90 contracts before the activity appeared, showing that this was fresh buying.

Those calls traded for as much as $0.27 today, 3 times their initial purchase price. The stock rose 10% 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 0.9% to $12.28 in midday trading. The miner is up sharply since hitting a 52-week low of $10.20 on Aug. 26.