$CLF bulls log fast money

Option traders have more than doubled their money on upside positions opened in Cleveland-Cliffs (CLF) only two sessions ago.

On Nov. 21, Market Rebellion’s Unusual Activity Service identified the purchase of 2,700 December $7.50 calls for $0.33 to $0.36 with shares at $7.33. This was clearly fresh buying, as volume was well above the strike’s previous open interest of 1,148 contracts.

Those calls traded for as much as $0.77 today, more than twice their purchase prices. The stock rose 10.78% in the same time frame, illustrating the kind of leverage that can be achieved 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.

CLF is up 1.76% to $8.08 this morning. The iron-ore producer has rallied in recent days with optimism over U.S.-China trade negotiations.

(Disclosure: I am long CLF.)