Upside option traders have profited from the recent rebound in oil shipper DHT Holdings.
On June 16, Investitute’s market scanners found that 5,100 July $4 calls were purchased for $0.15 to $0.20 with shares at $3.85. Volume was well above the strike’s open interest of 3,851 contracts, indicating that this was fresh buying.
Today those calls traded up to $0.40, more than doubling in value. The stock was up about 13.2 percent in the same period, pointing to 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. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.
DHT rose 5.78 percent today to close at $4.39. The Bermuda-based oil-tanker operator, along with other shippers, has risen recently as speculative buyers have purchased crude at depressed prices.