Option traders are seeing big profits on upside positions in Peabody Energy Corporation (BTU) today.
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.
Ready to start trading? Try Unusual Option Activity Essential. Learn how you can follow the “smart money” with a fresh UOA trade idea each week – including technical levels so that you know how to manage each trade!