Quick gains in Energy Transfer Equity

It took less than one full session for bullish option traders to double their money in Energy Transfer Equity.

Late yesterday, Investitute’s market scanners detected the purchase of 5,000 August $17 calls for $0.32 to $0.36 with shares at $16.75. Open interest in the strike was only 270 contracts before the activity appeared, showing that these were new positions.

This morning those calls traded up to $0.83, more than doubling in value less than 24 hours later. The stock was up just 5.6 percent at the same time, illustrating how quickly options can far outperform 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.

ETE rose 5.81 percent to $17.67 today. The energy-pipeline operator rallied after reporting quarterly results this morning.