Bulls triple their money in $XLI

Option traders turned significant profits on positions opened in the SPDR Industrial Fund at the beginning of the week.

On July 23, Investitute’s tracking systems found that 5,000 August $75.50 calls expiring were purchased from $0.48 to $0.52 as part of a bullish roll with shares at $73.95. There was no open interest in the strike heading into the day’s prints, indicating that this was fresh buying.

Those calls traded for as much as $1.50 today, 3 times their initial purchase prices. The stock rose 3.11% in the same time frame, illustrating the kind of leverage that can be achieved quickly 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.

XLI closed a penny higher at $76.01 today after climbing to $76.34 earlier in the session. The exchange-traded fund tracks a basket of core economic heavyweights such as Boeing, General Electric, and Caterpillar.