$MRO bulls double their money

Marathon Oil broke out of its recent range today, handing large profits to upside option positions opened only one session earlier.

Just yesterday, Investitute’s tracking systems detected the purchase of 5,050 April $15.50 calls for $0.64 to $0.69 with shares at $15.64. These were clearly new positions, as open interest in the strike was only 453 contracts before the activity appeared.

Those calls traded for $1.43 today, more than twice their purchase prices. The stock rose 7.1% at the same time, showing how quickly options can far outpace gains in their underlying shares.

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.

MRO jumped 5.73% to $16.80 today on heavy volume. The oil and natural-gas producer rallied as energy drillers have begun to catch up with the rising price of crude.