$CNX call prices increase sixfold

It took less than a week for CNX Resources to turn huge gains for bullish option traders.

Last Tuesday, Investitue’s proprietary programs flagged the purchase of 2,400 March $17 calls for $0.15 to $0.30 with shares at $15.71. This was clearly fresh buying, as open interest in the strike was only 189 contracts before the activity appeared.

Those calls sold for $0.96 today, more than 6 times their original purchase price. The stock rose 12.2% in the same time frame, showing how quickly options can far outpace gains in their underlying 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.

CNX jumped 4.37% today to close at $17.45. The oil and gas producer, which was spun off from Consol Energy last November, has seen insider buying in recent weeks.