$AA call buyers post gains of 550%

Bullish option traders saw huge gains today as Alcoa resumed its recent rally.

On June 22, Investitute’s market scanners identified the purchase of 10,000 August $32 calls for $1.12 as part of a bullish roll with shares at $29.92. Open interest in the strike was only 392 contracts before the trade occurred, showing that it was a new position.

Those calls were listed for $7.25 today, a gain just shy of 550 percent. The stock surged 31.1 percent in the same period, a huge move but still far below that of the options on a relative basis.

Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

AA jumped 4.61 percent to $39.23 today. Domestic aluminum and steel producers rallied as U.S. officials continued to press for trade restrictions on China.