$EXC bulls double their money

Option traders scored fast gains in Exelon (EXC) as shares trade to a new 3-month high today.

On Thursday, Oct. 8, Market Rebellion’s Unusual Activity tracking systems detected the purchase of 3,000 November $39 calls for $1.25 as part of both a bullish roll and combo by selling an equivalent number of downside November $35 puts for $0.59, bringing the cost of the trade just $0.66. These were both new positions as the volumes were well above their open interest of 2,809 and 695 contracts, respectively, with shares at $38.40.

Those calls traded up to $2.71 today, well over double their purchase price. Meanwhile the puts traded for $0.27, bringing the total return on the original bullish combo to 169%. The stock rose just 6.8% in the same time frame, underscoring how quickly 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.

EXC was last higher on the session by 2.29% at $40.90 in late-day trade. The utility company reportedly is weighing the separation of its non-utility assets according to a Bloomberg report.