Bulls quickly triple their money in Alcoa

Short-term trades turned a big profit after Alcoa’s earnings report this morning.

Just yesterday afternoon, Investitute’s proprietary tracking program detected the purchase of 4,400 Weekly $33 calls that expire this Friday for $0.70 to $1.18. These were clearly new positions, as their volume was far above the strike’s open interest of 154 contracts. Shares were around $33.10 at the time.

Those calls soared to $3.55 barely 24 hours later following the aluminum producer’s quarterly results, more than tripling in value. The stock was up 10.24 percent in the same period–a solid gain but nothing near the exponential move in the calls, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. But the contracts can drop in value if the stock stalls or pulls back.

AA rose 9.55 percent yesterday to close at $36.49.