$CLF bulls mine for quick gains

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

On Sep. 24, Market Rebellion’s Unusual Activity Service identified the purchase of 2,200 October $6.50 calls for $0.14 to $0.19 with shares at $5.71. This was clearly fresh buying, as volume was well above the strike’s previous open interest of 685 contracts.

Those calls traded for as much as $0.39 so far today, more than twice their average purchase price. The stock rose 14.19% 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 10.03% to $6.47 this morning. The iron-ore produce’s shares are higher today after announcing it will acquire substantially all of the operations of ArcelorMittal USA (MT) for about $1.4 billion.