$MPC bulls triple money

Option traders are logging huge profits on upside positions in Marathon Petroleum (MPC).

On Aug. 16, Market Rebellion’s activity scanners identified the purchase of 20,000 January $50 calls for $2.56-$2.57 as part of a bullish roll with shares at $46. This was clearly a new position, as volume was well above the strike’s previous open interest of 13,830 contracts.

Those calls traded for as much as $8.10 today, more than 3 times their purchase prices. The stock rose 21.84%, a large move but nowhere near that of its options on a relative basis.

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.

MPC is up 2.14% to $56.30 this afternoon. The oil refining and transportation company rallied along with other energy names as the price of crude spiked last week.