Bullish option traders turned enormous profits in Zion Oil & Gas today, just one session after they opened their positions.
Just yesterday, Investitute’s tracking systems identified the purchase of 2,000 December $5 calls for $0.50 with shares at $4.24. Open interest in the strike was only 656 contracts before the trade appeared, showing that it was a new position.
Today those calls traded up to $2.30 with Zion near session highs, a gain of more than 350 percent in 24 hours. The stock had soared 59.2 percent at the same time, a huge gain but still well below that of the options.
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.
ZN spiked higher by 39.01 percent to close at $5.88 today. The energy producer was one of the few winners in the sector as the company continued to report progress at key drilling sites.