Call buyers score with $APA

Option traders seeking upside from Apache (APA) got it today with shares trading at their highest levels since March of last year.

On this past Tuesday, Jan. 5, our Unusual Activity scanners identified the purchase of 5,000 January $16 calls expiring tomorrow, Jan. 15, for $0.64 to $0.75 above open interest of just 489 contracts with shares at $15.39.

Those calls traded for as much as $3.20 today, at least 4 times their purchase prices. The stock rose 24.69% 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.

APA was up 3.09% to close at $18.35 today. The hydrocarbon explorer moved higher this session, trading up within a gap left from Mar. 10, 2020 and was upgraded to Overweight from Equal Weight with a price target raised to $20 from $17 this morning at Barclays.