$GOLD calls shine brighter

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

On Apr. 21, Our Unusual Activity programs flagged the purchase of 10,000 Weekly $25 calls expiring tomorrow, Apr. 24, for $0.45 to $0.64 with shares at $24.73. These were clearly new positions, as volume was well above the strike’s open interest of 2,527 contracts.

Those calls traded up to $3.90 today, more than 6 times their purchase prices. The stock rose 14.8% 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 made a new 52-Week high of $28.50 early in the session and ended up 0.98% to $26.74. The miner has rallied sharply with the price of gold in recent months.