$DAN bulls triple their money

Dana has rebounded sharply in the New Year, returning exponential gains on upside option positions.

On Dec. 13, Investitute’s tracking systems detected the purchase of 2,600 January $14 calls for $0.80 to $0.90 with shares at $13.79. Volume was well above the strike’s open interest of 1,967 contracts before that session began, showing that this was fresh buying.

Those calls were marked at $2.55 this afternoon, 3 times their average purchase price. The stock rose 19.51% in the same time period, underscoring how options can far outperform their underlying shares.

Investitute co-founder Jon Najarian also cited buying in March $13 calls for $1.55 on CNBC’s “Halftime Report” Dec. 26. Those contracts have more than doubled in price.

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 was up 2.82% to $16.40 today. The auto driveline technology and axle-manufacturing company was upgraded to “buy” from “neutral” by UBS on Jan. 4 with a $19 price target. That followed Deutsche Bank’s initiation of the name with a “buy” rating and $17 target on Dec. 13.