$GOLD call prices shine

Option traders are racking up big profits today on upside positions opened in Barrick Gold (GOLD) only a week earlier.

On Feb. 88, Market Rebellion’s Unusual Activity Service found that 6,500 February $20.50 calls were bought for $0.25 as part of a bullish spread above the existing open interest of 1,113 contracts with shares at $19.73.

Those calls traded up to $1.94 today, more than 7 times their purchase price. The stock rose 13.74% at the same time, showing how quickly options can far outpace gains in 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.

GOLD was last up on the day by 7.3% to $22.19.