Option traders are seeing big profits on upside positions in Peabody Energy Corporation (BTU) today.
On Sep. 14, Market Rebellion’s Unusual Activity programs found the the purchase of 8,000 October $24 calls for $1.14 to $1.25 above the existing open interest of 4,306 with shares at $24.10.
Those calls have traded for as much as $2.23 today, a 78.4% return, while the stock rose 7.18% at the same time, showing how options can far outperform their underlying shares.
Long calls lock in the price where a 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.
BTU finished the day up 4.52% at $25.66.
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