$USG call buyers rack up 900% profit

Option traders posted stratospheric gains in USG today.

On Aug. 29, Investitute’s tracking systems detected the purchase of 2,000 September $30 calls for $0.20 and $0.25 with shares at $28.26. This was clearly fresh buying, as open interest in the strike was a mere 64 contracts before that session began.

Today those calls traded for $2.20, representing an average profit of nearly 900 percent in a little over a week. The stock rose 13.1 percent at the same time, 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.

USG jumped 7.03 percent to $31.96 today. The drywall maker has rallied sharply in the last week, as the company’s products are expected to be in demand for rebuilding the storm-ravaged Gulf of Mexico.