Call prices up fivefold in $VST

Bullish option traders have turned exponential gains in Vistra Energy after just three sessions.

On Sept. 28, Investitute’s market scanners identified the purchase of 13,300 October $25 calls for $0.35 to $0.55 with shares at $24.51. Volume was well above the strike’s open interest of 4,137 contracts, showing that this was fresh buying. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls rose to $1.75 today, 5 times their initial purchase price. The stock rose 7.14% 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.

VST was up 0.75% to $25.45 today. The electricity producer’s shares reached a 52-week high of $26.29 on heavy volume this afternoon.