$X calls skyrocket in less than a week

Bullish traders scored exponential gains on U.S. Steel options that expired today.

On Tuesday, Investitute’s market scanners showed that 4,300 Weekly $29 calls expiring this afternoon were purchased for $0.10 to $0.30 with shares at $28.53. This was clearly fresh buying, as volume was well above the strike’s open interest of 3,265 contracts.

Those calls traded up to $1.20 this morning, 12 times their original purchase price. The stock rose less than 6 percent in the same time frame, underscoring how quickly options can far outpace gains in their underlying shares. It was the third winning trade in U.S. Steel posted on Investitute in the last month.

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.

X was up 1.31 percent today to close at $29.30. The steel maker rallied along with other metal producers this week as the federal government stepped up efforts on anti-dumping efforts against China.