$KMI call buyers turn quick profits

It took just two sessions for bullish option traders to double their money in Kinder Morgan.

Last Thursday, Investitute’s market scanners showed that 2,500 Weekly $17 calls expiring on June 29 were purchased in one print for $0.10 with shares at $15.96. This was clearly fresh buying, as open interest in the strike was only 158 contracts before the trade occurred.

Those calls sold for $0.20 this morning, twice their purchase price. The stock rose 2.3% in the same time frame, 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.

KMI was up 0.94% to $16.04. Canada announced today that it is buying the Trans Mountain pipeline from the Houston-based energy-infrastructure company for $3.5 billion.