Apache calls up 300% in four hours

Bullish turned lightning-fast profits today as Apache surged with takeover rumors.

In the first hour of today’s session, Investitute’s market scanners detected the purchase of 2,500 July $48 calls for $0.28 to $0.50 with shares at $47.89. Volume was well above the strike’s open interest of 690 contracts, showing that this was fresh buying.

Those calls traded up to $2.10 by midday, a gain of more than 300 percent in less than four hours. The stock rose less than 4.6 percent at the same time, underscoring how quickly options can far outperform 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.

APA rose 4.44 percent to $49.86 today. The oil and natural-gas producer began rallying early today with the circulation of acquisition rumors and continued higher along with the rest of the energy sector as the price of crude jumped.