Short-term calls skyrocket in $COP

Upside option positions opened in ConocoPhillips early this week have skyrocketed as the energy company recovers from Hurricane Harvey.

On Monday, Investitute’s market scanners found that 1,200 Weekly $47.50 expiring on Sept. 29 calls were purchased for $0.21 to $0.32 with shares at $46.98. These were clearly new positions, as open interest in the strike was a mere 63 contracts before that session began.

Those calls traded up to $2.06 today, nearly 10 times their original price. The stock was up less than 5.5 percent in the same time frame, showing 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.

COP was up 0.8 percent today to close at $49.08. The oil and gas producer has fared better than many of its competitors, partly because it sold some assets earlier this year to shore up its balance sheet. The company also said Tuesday that its Eagle Ford production has resumed pre-hurricane levels of operation.