$EOG calls rack up large profits

Bullish option traders have scored substantial gains in EOG Resources.

On Sept. 19, Investitute’s market scanners identified the purchase of 1,800 October $115 calls for $5.85 to $6.93 as part of a bullish spread with shares at $120.40. This was clearly a new position, as volume was well above the strike’s open interest of 1,183 contracts.

Those calls traded up to $14.75 today, more than twice their purchase prices. The stock rose 7.62% in the same time frame, underscoring how options can far outperform 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.

EOG ended today’s session up 1.21% to $129.49. The oil and natural-gas producer has risen with the rest of the industry as the price of oil has rallied.