Bulls turn quick gains in $KMI

It took just two sessions for traders to triple their money in Kinder Morgan.

On Tuesday, Investitute’s tracking systems found that 6,100 Weekly $16 calls expiring on May 4 were purchased for $0.27 to $0.31 with shares at $15.81. These were clearly new positions, as open interest in the strike was only 410 contracts.

Those calls traded for $1 this morning, more than 3 times their purchase prices. The stock rose 7.3% in the same time frame, showing how quickly options can far outpace gains in 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.

KMI was up 2.29% to close at $16.54 this afternoon. The stock has gained with the rest of the energy sector recently, and Canadian Prime Minister Justin Trudeau said today that his government is actively negotiating the proposed Kinder Morgan Trans Mountain pipeline.