Call buyers double their money in $SUM

Summit Materials hit new highs today, handing big gains to bullish option traders.

On Aug. 30, Investitute’s proprietary programs cited the purchase of 2,500 October $30 calls in one print for $1 with shares at $29.21. This was a new position, as there was no open interest in the strike before that session began.

Those calls traded as high as $2.25 today, more than doubling in value. The stock rose 8.5 percent in the same time period, underscoring the type of leverage that can be achieved through options. Investitute co-founder Pete Najarian, who cited those calls on CNBC’s “Halftime Report” at the time they were bought, said on the program today that he was closing the trade with the profits cited above.

Long calls lock in the price where a 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.

SUM was up 2.07 percent to close at $31.59 today after reaching a 52-week high of $31.85 earlier in the session. The cement and asphalt producer rallied along with other names in the industry following news that Dublin-based materials giant CRH was purchasing privately held Ash Grove Cement for $3.5 billion.