Bulls turn quick profits in $STNG

It took less than week for upside option traders to collect exponential gains in Scorpio Tankers.

Last Wednesday, Investitute’s market scanners identified the purchase of 6,900 June $3 calls at the same time for $0.05 with shares at $2.83. This was clearly a new position, as open interest in the strike was only 228 contracts before the trade occurred.

Those calls sold for $0.31 this morning, more than 6 times their purchase price. The stock rose 14.5% 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.

STNG was up 2.27% to $3.15 today. The Monaco-based company has rallied along with other tanker operators as the spread between West Texas Intermediate oil and Brent crude prices has widened, making it more attractive for overseas business to ship fuel from the United States.