$MDR call buyers score again

Bullish option traders are cashing in on McDermott (MDR) today for the second time in less than a week.

On June 27, Investitute’s market scanners identified the purchase of 9,100 August $10 calls bought for $0.60 to $0.70 with shares at $9.11. Volume was far above the strike’s previous open interest of 3,133 contracts, showing that this was fresh buying.

Those calls traded up to $1.30 so far today, twice their average purchase price. The stock rose 16.14% in the same time frame, illustrating the kind of leverage that can be achieved with options.

It is the second winning trade in the name posted on Investitute in the last four sessions.

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.

MDR is up 0.72% to $1057 in midday trading. The energy construction and engineering company announced several major contracts with Saudi Aramco last week.