Bulls double money in $PCG

It has taken less than a week for option traders to post big gains on upside positions in PG&E (PCG).

On Oct. 1, our tracking systems detected the purchase of 7,000 October $11 calls mostly in one print of 6,725 for $0.71 and $0.72 above open interest of 770 contracts with shares at $9.88. Market Rebellion co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report” and updated the position on the program today.

Those calls traded for as much as $1.86 today, more than 2.5 times their purchase prices. The stock rose 21.56% in the same time frame, a large move but nowhere near that of its options on a relative basis.

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.

PCG is up 7.08% to $11.64 this afternoon. On Friday the California utility company announced $34.35 billion in debt-financing commitments for its Chapter 11 bankruptcy reorganization.

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