$DEN option bulls double money

Bullish option traders are seeing big profits today in Denbury Inc (DEN).

On Oct. 3, Market Rebellion’s Unusual Option Activity Service found that 3,000 October $95 calls were bought for $4.51 to $5.30 as part of a bullish spread with shares at $88.61. This was clearly fresh buying, as open interest in the contract was just 2,006 before the activity appeared.

Those calls traded for as much as $12.70 this session, more than 2 times their purchase prices. The stock rose 16.13% at the same time, underscoring how quickly options can far outperform 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.

DEN was at $99.05 this afternoon, finishing up 6.68% on the day.