Bulls post large gains in $CSTM

Option traders have quadrupled their money in Constellium.

On Nov. 15, Investitute’s market scanners cited the purchase of 2,000 February $11 calls for $0.55 as part of a bullish roll with shares at $9.13. This was clearly a new position, as open interest in the strike was only 384 contracts before that session began.

Those calls traded for $2.27 today, more than 4 times their purchase price. The stock surged 43.3 percent in the same time period, a huge move but one that was still far below 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.

CSTM jumped 6.43 percent to $13.25 today. The Dutch aluminum manufacturer has rallied as prices of the metal have risen, primarily because of demand in China.