$DVN bulls double their money

A huge option trade has racked up major gains in Devon Energy.

On June 5, Investitute’s market scanners identified the purchase of 24,000 October $42 calls for $2.45 as part of a bullish roll with shares at $39.31. This was clearly a new position, as open interest in the strike was only 365 contracts before the activity appeared.

Those calls traded for $4.79 today, twice their purchase price. The stock rose 11.7% in the same time frame, illustrating the kind of leverage that can be achieved with options. Investitute co-founder Pete Najarian cited the winning trade on CNBC’s “Halftime Report” today while reporting that those options were rolled yet again to 50,000 July $42 calls.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

DVN was up 0.25% today to close at $43.58. The oil and natural-gas producer has rallied along with other energy names as the price of crude has spiked higher.