Traders pocket enormous profits in $APC

Bullish option positions saw manifold gains in Anadarko Petroleum today, barely a week after they were opened.

On Sept. 13, Investitute’s tracking systems detected the purchase of 3,300 October $45 calls for $0.66 to $0.78 with shares at $42.97. Volume was well above the strike’s open interest of 1,220 contracts, indicating that this was fresh buying.

Those calls sold for $3.90 today, more than 5 times their original prices. The stock was up 12.8 percent in the same time, illustrating the kind of leverage that can be achieved with options.

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.

APC jumped 8.21 percent to $48.49 today. After the market closed yesterday, the oil and gas producer announced that it planned to buy back $2.5 billion in stock.