Huge trade hits gusher in Petrobras

A large bullish position is yielding big returns after Petrobras posted strong quarterly results.

On Tuesday, Investitute’s market scanners detected the purchase of 15,000 May $10 calls in one print for $0.05 as shares went for $9.30. This was clearly a new position, with volume exceeding the strike’s open interest of 14,170 contracts.

Those calls traded this morning for $0.44, gaining nearly 800 percent in only four sessions. The stock rose less than 11 percent in the same period, showing 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.

PBR rose 5.57 percent to $10.24 today. The Brazilian energy giant gapped higher this morning after reporting its largest profit in two years yesterday afternoon.

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