$TECK calls surge with metals, materials

Bullish option traders are racking up big profits in industrial miner Teck Resources.

On July 27, Investitute’s proprietary programs cited the purchase of 5,500 September $20 calls for $2.30 to $2.38 with shares at $21.56. This was clearly fresh buying, as open interest in the strike was just 26 contracts before the trades occurred.

Those calls ended today’s session marked at $5.43, more than doubling in value. The stock rose 18.1 percent in the same time period, illustrating the kind of leverage that can be achieved through options.

Long calls lock in the price where the 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.

TECK was up 2.13 percent today to close at $25.46. Jefferies upgraded the materials sector by two notches to “overweight” earlier this week, citing increased foreign demand, rising commodity prices, and favorable currency rates.