$MRO bulls rack up huge gains overnight

It took just one session for upside option positions to reap exponential profits in Marathon Oil, which has been rebounding with the price of crude.

Just yesterday, Investitute’s market scanners found that 3,900 Weekly $12.50 calls expiring tomorrow were purchased for $0.04 to $0.13 with shares at $12.40. These were clearly new positions, as open interest in the strike was only 882 contracts before the activity appeared.

Those calls traded for $0.30 today, about 4 times its original prices on average. The stock was up less than 3 percent in 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.

MRO rose 2.5 percent to $12.73 today. The beaten-down energy company bounced off 52-week lows twice last month and could be on the verge of breaking a steep downtrend that began last December, when it was trading above $19.