AK Steel bulls up 300% in 24 hours

Option traders turned huge profits in AK Steel just one day after opening upside positions.

Only yesterday, Investitute’s proprietary programs found that 5,000 Weekly $6.50 calls expiring this afternoon were purchased $0.05 and $0.06 with shares at $6.29. Volume was above the strike’s open interest, showing that this was fresh buying.

Today those calls traded for $0.20, a gain of nearly 300 percent just one session later. The stock was up just 5.41 percent at the same time, illustrating how quickly options can far outperform their underlying shares. It was the second winning trade for AK Steel in as many days, following large gains in the regular monthly July $6.50 calls.

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.

AKS fell 2.11 percent to close at $6.50 today, pulling back after opening at its session high of $6.68. It rallied along with other U.S. steel makers after President Trump said yesterday that he would consider tariffs and quotas on imports. The company is scheduled to report earnings before the market opens on July 25.