How $HUN bulls racked up quick gains

It took less than a week for option traders to triple their money in bullish positions on Huntsman.

On Tuesday, Investitute’s market scanners identified the purchase of 5,600 November $30 calls for $0.40 to $0.65 with shares at $29.40. These were clearly new positions, as volume was more than double the strike’s open interest of 2,115 contracts.

Those calls traded for $1.50 this morning, more than 3 times their original purchase price. The stock rose 5.7 percent at the same time, showing how quickly options can far outpace gains in 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.

HUN jumped 4.23 percent to $31.06 today. The chemical manufacturer rallied on news that it had scrapped a proposed $20 billion merger with Swiss company Clariant after objections from activist investors.