Call prices soar fivefold in $LNG

Option traders have racked up exponential gains in Cheniere Energy with shares at 52-week highs.

On May 2, Investitute’s market scanners found that 4,220 Weekly $63.50 calls expiring this Friday were purchased for $0.54 as part of a bullish spread with shares at $59.90. Open interest in the strike was just 1 contract before the trade occurred, showing that this was a new position.

Those calls traded for $2.88 today this morning, more than 5 times their purchase price. The stock rally 11.3%, underscoring how quickly options can far outperform 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.

LNG was up 0.32% today to close at $62.96 after spiking to a 52-week high of $66.66 at the open. The liquefied natural-gas company rallied sharply after topping earnings estimates and raising its outlook on May 4.