$COP bulls double their money

Option traders are cashing in as ConocoPhillips hovers near 52-week highs.

On April 9, Investitute’s tracking systems showed that 4,400 Weekly $57 calls expiring on April 27 were purchased for $3.40 to $3.85 with shares at $60.15. Those were clearly new positions, as open interest in the strike was a mere 48 contracts before the trades occurred. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls rose to $9.03 today, more than 2.5 times their initial purchase price. The stock rose 9.7% in the same time frame, underscoring how options can far outperform their underlying shares.

It was the second winning trade in the name posted on Investitute less than two weeks. Traders had already doubled their money on Weekly $61 calls that expired on April 13.

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.

COP was off 0.78% today to close at $65.79. The oil and natural-gas producer has rallied along with the rest of the energy sector as the price of crude has reached its highest level in more than three years.