$OXY turns quick profits for bulls

Option traders have piled into Occidental Petroleum in the last week, and their bets are already paying off.

On Jan. 5, Investitute’s market scanners found that 7,200 Weekly $74.50 calls expiring on Feb. 9 were purchased for $1.40 with shares at $74.65. These were clearly new positions, as open interest in the strike was a mere 12 contracts before that session began.

Those calls traded for $2.80 this morning, doubling in price. The stock rose 2.8 percent in the same time frame, showing the kind of leverage that can be achieved through options. Investitute co-founder Pete Najarian cited that winning trade as well as more buying in the February $77.50 calls today on CNBC’s “Halftime Report.”

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 up 0.94 percent today to close at $76.53. The oil and natural-gas producer has rallied with the rest of the energy sector as crude has climbed to its highest prices in more than three years.