$DVN bulls double their money

Devon Energy has joined the growing list of energy companies to yield substantial returns on upside option positions.

On May 2, Investitute’s tracking systems flagged the purchase of 10,000 May $39 calls for $1.04 as part of a bullish roll with shares at $38.46. Volume was well above the strike’s open interest of 3,324 contracts, showing that this was a new position. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report” and pointed to more bullish options in the name this afternoon.

Those calls traded for $2.60 today, more than double their purchase price. The stock rose 7.9% in the same time frame, illustrating how 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.

DVN was up 0.9% to $41.32 today. The oil and natural-gas producer has rallied along with other energy names as the price of crude has climbed to multi-year highs.