Calls score after $KEY earnings

Option traders doubled their money in KeyCorp before their bullish positions in the name expired today.

On Jan. 14, Investitute’s market scanners showed that 12,100 Weekly $16.50 calls expiring this afternoon were purchased for $0.23 to $0.25 with shares at $16.08. These were clearly new positions, as volume in the strike was a mere 142 contracts before the trades occurred. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls sold for $0.55 today, more than twice their purchase prices. The stock rose 6.03% 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.

KEY reached a session high of $17.06 this morning before pulling back to close at $16.81, off 0.41% on the day. The regional bank rallied after topping quarterly expectations on the top and bottom lines Jan. 17.