Call buyers are making bank in $KRE

Option traders have doubled their money in the SPDR S&P Regional Banking Fund (KRE) after just one weekend.

On Friday, Aug. 16, Our tracking systems detected the purchase of 7,300 Weekly $51 calls expiring on 06September from $0.55 to $0.65 with shares at $49.50. This was clearly a new position, as open interest in the strike was only 125 contracts before that session began. Co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls have traded for $1.21 today, double their average purchase price. The stock rose 3.01% 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.

KRE is currently higher on the session by 1.16% at $50.57. The exchange-traded fund has rebounded with other financials while interest rates have rebounded from lows made last week.