$CLF keeps paying off for bulls

Option traders rang the register once again in Cleveland-Cliffs today.

On Nov. 19, Investitute’s tracking systems detected the purchase of 2,000 February $10 calls for $1.02 to $1.05 with shares at $9.97. Open interest in the strike was only 124 contracts before the trade occurred, showing that it was a new position.

Those calls sold for as much as $2.10 today, at least twice their purchase prices. The stock rose 21.46% in the same time period, illustrating the kind of leverage that can be achieved with options. It is the fifth winning trade in CLF posted on Investitute in the last month.

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 popped to $12.17 this morning before pulling back to close at $11.67, still up 0.17% on the session. On Feb. 8 the iron-ore producer missed quarterly estimates but issued strong guidance.

(Disclosure: I am long CLF.)