$ET bulls double their money

Option traders scored significant gains in Energy Transfer today with upside positions in two strikes.

On Oct. 24, Investitute’s tracking systems detected the purchase of 5,000 November $16 calls for $0.43 to $0.45 above with shares at $15.80. Volume was well above the strike’s open interest of 3,153 contracts, showing that this was fresh buying.

Those calls traded for as much as $1.10 today, 2.5 times their purchase prices. The stock rose 7.59% in the same time frame, underscoring how options can far outperform their underlying shares.

In addition, just yesterday, 26,000 December $17 calls were purchased for $0.30 to $0.34 with shares at $15.67. These were new positions as well, as volume was far above that strike’s open interest if 8,180 contracts.

Those calls traded up to $0.75 early today, more than twice their purchase prices. The stock gained 7.4% in the same period.

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.

ET spiked to $17.04 early this morning but pulled back with the rest of the energy sector to close at $16.06, up 0.56% on the session. The natural-gas storage company rallied after reporting strong pipeline grown as part of its earnings report last night.