Energy bulls ride $CVE higher

Option traders have doubled their money on upside positions in Cenovus Energy.

On April 1, Investitute’s proprietary programs flagged the purchase of 23,000 May $10 calls for $0.35 as part of a bullish roll with shares at $9.01. This was clearly a new position, as open interest in the strike was only 1,526 contracts before the trade occurred.

Those calls sold or $0.70 and $0.75 today, more than twice their purchase price. The stock rose 16.2% in the same time period, illustrating the kind of leverage that can be achieved with options.

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.

CVE was up 3.37% to $10.43 today. Goldman Sachs up graded the name to “neutral” from “sell” and raised its price target to $11 from $7.50 on April 16. The Canadian oil and gas company was is scheduled to report earnings before the market opens on April 24.