How call prices tripled in $ETP

Bullish option traders are racking up substantial profits in Energy Transfer Partners.

On March 27, Investitute’s tracking systems detected the purchase of 7,100 June $16 calls for $0.74 to $1.10 with shares at $16.14. Volume was well above the strike’s open interest of 5,051 contracts, indicating that this was fresh buying.

Those calls traded for $2 just before the closing bell, nearly 3 times their initial purchase price. The stock rose 10.4% in the same time period, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

ETP jumped 4.63% to $17.84 today. The natural-gas pipeline operator’s stock appears to have formed a double bottom on its chart, having rebounded at the same level where is bounced sharply last November.