Energy bulls score again in $XOP

Option traders have tripled their money on upside positions in the SPDR S&P Oil & Gas Exploration & Production Fund.

On April 5, Investitute’s tracking systems showed that 7,692 Weekly $32.50 calls expiring on April 26 were bought in one print for $0.32, as part of a bullish roll, with shares at $31.23. This was clearly a new position, as open interest in the strike was a mere 509 contracts before the trade occurred.

Those calls traded for $0.96 today, 3 times their purchase price. The stock rose 5.32% in the same time period, underscoring how options can far outperform their underlying shares on a relative basis.

This trade marks the second winning position found by Investitue’s market scanners, in the past week.

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.

XOP was up 3.31% to $32.46 today. The exchange-traded fund rallied while Chevron (CVX) announced it would acquire Anadarko Petroleum (APC) early this morning, raising the possiblity for other M&A in the energy space, as well as the price of crude remaining near five-month highs.