Upside option traders have doubled their money in Frontline Ltd (FRO) today.
On Jun. 10, Market Rebellion’s Unusual Activity tracking systems found that 3,448 November $12 calls were bought for $0.55 to $0.60 with shares at $9.28. This was clearly a new position, as open interest in the strike was only 134 contracts before the trade occurred.
Those calls traded for $1.63 this session, more than 2.5 times their purchase prices. The stock rose 39.87% in the same time frame, illustrating the kind of leverage that can be achieved with options.
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.
FRO was last higher this session by 8.52% to $12.94 today.
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