$DAN bulls in driver’s seat

Option traders have tripled their money in Dana for the second time this month.

On Dec. 26, Investitute’s market scanners flagged the purchase of 7,433 March $13 calls for $1.55 as part of a bullish roll with shares at $12.77. Open interest in the strike was only 143 contracts before the trade occurred, showing that it was a new position. Investitute co-founder Jon Najarian cited the unusual activity at that time on on CNBC’s “Halftime Report.”

Those calls traded for $4.84 today, more than 3 times their purchase price. The stock rallied 39.23% in the same time period, a huge move but still nowhere near that of its options on a relative basis. It is the second winning trade in DAN posted on Investitute in less than three weeks.

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.

DAN reached $17.86 this afternoon before pulling back to close at $17.62, off 1.12% on the session. The auto driveline technology and axle-manufacturing company, which received recent upgrades from UBS and Deutsche Bank, is still trading at its highest levels since last October.