Option bulls fuel up with gains in $VLO

Option traders are fueling up with big gains this session in upside call positions on Valero Energy Corporation (VLO).

On Apr. 28, Market Rebellion’s Unusual Option Activity Service found that 3,840 June $120 calls were bought for $5.10 as part of a bullish combo with shares at $115.45. This was clearly fresh buying, as open interest in the contract was just 1,237 before the activity appeared.

Those calls have sold for as much as $21.35 today, more than 4 times their purchase price. The stock rose 22.13% in the same time frame, showing how options can far outperform moves in their underlying shares 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.

VLO was last higher by 1.82% at $141.21.

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