$NE calls turn large profits in 3 days

Short-term option traders scored significant gains today as Noble sprinted higher with the price of oil.

On Wednesday, Investitute’s market scanners found that 2,000 Weekly $4 calls expiring this afternoon were purchased for $0.08 to $0.13 with shares at $4.01. This was clearly new positioning, as volume was far above the strike’s open interest of 511 contracts.

Those calls traded for $0.49 this morning, 6 times its original purchase price. The stock rose 12.2 percent in the same time, reflecting the type of leverage that can be obtained 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.

NE jumped 6.7 percent to $4.46 today. The beaten-down offshore energy driller spiked higher this morning after breaking above resistance at its 50-day moving average.