Bulls post 300% profit in U.S. Steel

Upside option trades turned exponential gains as U.S. Steel reported strong quarterly numbers.

On June 15, Investitute’s market scanners detected the purchase of 12,200 August $24 calls for $0.80 to $0.88 with shares at $20.24. Volume was far above the strike’s open interest of 3,816 contracts, showing that this was fresh buying.

Those calls traded up to $3.66 today, a gain of more than 300 percent. The stock rose 35.3 percent in the same period, a large move but still far less than that of the options on a relative basis.

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.

X rallied 7.2 percent today to close at $26.20. The steel maker surpassed quarterly estimates and issued guidance above expectations yesterday afternoon.