$WFT call buyers drilling for profits

Option traders posted quick gains on bullish positions opened in Weatherford less than a week ago.

Last Thursday, Investitute’s proprietary programs showed that 13,400 Weekly $4 calls expiring this Friday were purchased for $0.04 to $0.06 with shares at $3.85. These were clearly new positions, as open interest in the strike was only 509 contracts before the activity appeared.

Those calls traded for $0.12 this morning, triple their original purchase price. The stock rose 6 percent in the same time, illustrating the type of leverage that can be obtained 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.

WFT was up 0.5 percent to $4.05 today. The oil and natural-gas producer has rallied as the energy sector has rebounded in recent months.