Bullish option traders have been riding the recent bounce in CVR Energy.
On Aug. 14, Investitute’s proprietary programs cited the purchase of 2,000 September $20 calls for $0.25 with shares at $17.85. This was clearly new positioning, as open interest in the strike was only 231 contracts before that session began.
Today those calls traded up to $1 for a profit of 300 percent. The stock has rallied 31.3 percent in the same time frame, a strong move but still one that lagged that of its options by a wide margin on a relative basis.
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.
CVI finished today’s session up 5.83 percent to $19.96, continuing a rebound that began two weeks ago after steep losses. The oil refiner has been at the center of a controversy involving billionaire investor Carl Icahn and his ties to the White House.