$PXD call buyers make fast money

Nimble option traders pocketed quick profits in Pioneer Natural Resources today.

On Tuesday, Investitute’s tracking systems found that 5,300 Weekly $155 calls expiring this Friday were purchased for $1.40 as part of a bullish spread with shares at $148.84. This was clearly a new position, as open interest in the strike was only 158 contracts before trade occurred. Investitute co-founder Jon Najarian cited the unusual activity that day on CNBC’s “Halftime Report.”

Today those calls sold for $2 today, a gain of 43 percent. The stock was up just 3.2 percent at the same time, showing how quickly options can outperform 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.

PXD reached a session high of $154.86 early today before pulling back to close at $147.80, down 4.01 percent. The oil and gas producer beat forecasts on the top and bottom lines before the market opened.