$GGB bulls quintuple their money

Bullish option traders have posted exponential profits in Brazilian steel maker Gerdau as it has benefited from the recent rally in its industry.

On Oct. 11, Investitute’s proprietary programs cited the purchase of 5,000 March $4 calls for $0.25 with shares at $3.41. Open interest in the strike was just 457 contracts before the trade occurred, showing that this was clearly a new position.

Those calls last traded for $1.30, more than 5 times their purchase price. The stock soared 53.7% in the same time period, a huge move but one that was still far below that of its options.

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.

GGB closed today unchanged at $4.93. The company, which has risen along with other steel makers, is trading at its highest level since 2014.