Traders strike pay dirt in $WPM

Wheaton Precious Metals rallied along with gold and silver as investors sought safe havens today, and upside option positions turned quick profits overnight.

Just yesterday, Investitute’s proprietary programs found that 6,400 October $20 calls were purchased for $0.11 to $0.26 with shares at $20.01. Volume was more than double the strike’s open interest of 3,143 contracts, indicating that this was fresh buying.

Those calls ended today’s session trading for $0.69, more than 6 times their original purchase price. The stock was up only 3 percent at the same time, showing how quickly options can far outpace 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.

WPM rose 3.25 percent today to close at $20.65. The silver and gold brokerage company is scheduled to report earnings on Nov. 9 after the market closes.