$ITB call buyers double money

Option traders have score big gains on upside positions in the iShares U.S. Home Construction Fund.

On March 27, Investitute’s market scanners found that 5,000 Weekly $37 calls expiring on May 3 were bought for $0.53 as part of a bullish roll with shares at $35.72. There was no open interest in strike before the trade occurred, showing that it was a new position.

Those calls were marked at $1.25 at the end of today’s session, more than twice their purchase price. The stock rose 6.08% 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.

ITB was up 0.26% to $37.89 today. The exchange-traded fund and its component homebuilders have rallied as mortgages rates have declined.