$MRO calls double overnight

Option traders racked up big profits today on bullish positions opened in Marathon Petroleum only one session earlier.

Just yesterday, Investitute’s tracking systems detected the purchase of 5,000 March $16 calls for $0.57 as part of a bullish spread with shares at $15.71. This was clearly a new position, as volume was well above the strike’s previous open interest of 2,940 contracts before the trade occurred.

Those calls sold for $1.53 today, more than 2.5 times their purchase price. The stock rose 10% at the same time, underscoring 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 8.75% to $16.91 today. The oil and gas producer beat earnings and revenue estimates after the market closed yesterday.

(Disclosure: I am long MRO.)