Option traders have found a barrel of gains on short-term positions opened in Occidental Petroleum (OXY) last week.
On Aug. 19, Market Rebellion’s Unusual Option Activity Service found that 3,000 Weekly $66 calls, expiring this Friday, were bought for $1.17 to $1.18 as part of a bullish spread above open interest of just 1,640 contracts with shares at $64.63.
Those calls traded for as much as $9.50 so far today, over 8 times their purchase prices. The stock rose 16.79% in the same time frame, illustrating the kind of leverage that can be achieved quickly 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.
OXY was last up 1.76% at $75.09 this afternoon.
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