Valero Energy is turning large profits for upside option positions.
On June 21, Investitute’s proprietary programs found that 3,992 July $65 were purchased in one print for $1.43 with shares around $64.70. This was clearly a new position, as its volume was well above the strike’s open interest of 2,873 contracts.
Those calls traded for $3.62 late this afternoon, a gain of more than 150 percent. The stock rose just 5.4 percent in the same time, underscoring the kind of leverage that options can provide.
Long calls lock in the price where the 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.
VLO rose 2.59 percent to $68.18 today. The oil refinery has received several analyst upgrades in recent weeks, with price targets as high as $85.