Option bulls turn fast profits in $AIG

Bullish option traders that opened upside positions yesterday in AIG (AIG) tripled their money today.

On Jul. 20, Market Rebellion’s Unusual Activity Service found that 3,000 Weekly $46 calls, expiring next Friday, Jul. 30, were bought for $1.00 above the previous open interest of just 34 with shares at $45.79.

Today those calls sold for $3.05, more than tripling in value less than 24 hours later. The stock was up 6.68% 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.

AIG was last higher by 2.33% to $48.33 today. The company is scheduled to next report earings on Aug. 5 after the close.