Bulls triple their money in $X

U.S. Steel has hammered out huge gains for option traders in recent months, and today was no exception.

On Dec. 18, Investitue’s tracking systems found that 13,500 Weekly $31 calls expiring this Friday were purchased for $2.04 to $2.42 with shares at $32.85. These were clearly new positions, as open interest in the strike was a mere 89 contracts before the trades occurred.

Those calls sold for $6.35 at the end of today’s session, more than 3 times their original purchase price. The stock rose 14 percent in the same time period, illustrating how options can far outperform their underlying shares.

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.

X was up 3.16 percent today to close at $69.52. The company has rallied sharply along with other steel makers in the last two months, first with government anti-dumping measures against foreign importers and then with optimism over tax cuts and infrastructure programs in 2018.