$DVN call prices jump threefold

Bullish option positions opened in Devon Energy the day after Christmas are scoring big gains.

On Dec. 26, Investitute’s tracking systems detected the purchase of 5,000 18April $24 calls in one print for $1.87 with shares at $21.89. This was clearly a new position, as open interest in the strike was a mere 17 contracts before that session began.

Those calls were marked at $5.68 this afternoon, 3 times their purchase price. The stock rose 3.5% in the same time period, showing how options can far outperform their underlying shares.

Investitute co-founder Pete Najarian cited more call buying in Devon today on CNBC’s “Halftime Report,” as the same trader has apparently been rolling option positions higher as the stock has climbed this year.

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 0.85% to $29.50 today. The oil and natural-gas producer has rebounded sharply along with other energy names as the price of crude has risen.