Calls rocket higher in $MT

It took just four sessions for bullish option traders to double their money in ArcelorMittal (MT).

On Dec. 3, Market Rebellion’s Unusual Option Activity Service found that 2,100 December $16.50 calls were bought for $0.66 to $0.70 with shares at $16.48. This was clearly fresh buying, as open interest in the strike was only 59 contracts before the activity appeared.

Those calls have traded for as much as $1.52 today, more than 2 times their purchase prices. The stock rose 8.62% in the same time frame, illustrating how quickly options can far outperform their 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.

MT traded higher this morning up to $18.04 but has since pulled back, lower on the day by 0.45% at $17.80. The steel maker has rallied in recent days with optimism over U.S.-China trade negotiations.