$HAL calls soar fivefold in days

Bullish option traders turned exponential gains on short-term positions in Halliburton that expired today, the last session before its quarterly results.

On Jan. 16, Investitute’s market scanners identified the purchase of 11,700 January $31 calls for $0.17 to $0.21 with shares at $30.42. Open interest in the strike was only 443 contracts before the trades occurred, showing that these were new positions.

Those calls sold for as much as $1.15 just before the closing bell today, more than 6 times their average purchase price. The stock rose 5.65% in the same time frame, illustrating 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.

HAL jumped 4.37% to $32.25 today, one session after Cowen upgraded the name to “outperform” from “perform” but lowered its price target to $35 from $45. The energy-services company is scheduled to report fourth-quarter earnings on Jan. 22 before the market opens.