Bulls cash in on Intrepid Potash

Intrepid Potash released strong quarterly numbers this morning, handing big profits to upside option traders.

On July 13, Investitute’s market scanners identified the purchase of 2,000 September $3 calls for $0.30 with shares at $2.69. Volume was well above the strike’s open interest, showing that it was a new position.

Those calls traded up to $0.75 today, more than doubling in value. The stock rose 32.3 percent in the same time, a big move but still well below that of the options on a relative basis.

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.

IPI spiked higher by 17.49 percent to $3.56 today after hitting a 52-week high of $3.59 just before the close. The fertilizer company beat earnings and revenue expectations while reporting improved gross margins before the market opened.