$OXY bulls double money

Option traders have logged quick profits on short-term positions opened in Occidental Petroleum (OXY) earlier this week.

On Dec. 9, Market Rebellion’s Unusual Activity Service showed that 2,900 Weekly $38.50 calls were bought for $0.14 to $0.21 with shares at $37.76. This was clearly fresh buying, as open interest in the strike was only 607 contracts before that session began.

Those calls have traded for as much as $0.32 so far today, more than twice their initial purchase price. The stock rose 2% in the same time frame, illustrating the kind of leverage that can be achieved quickly 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.

OXY is up 2.14% to $38.35 this morning. The oil and gas producer has rebounded with the rest of the energy sector this week.

(Disclosure: I am long OXY.)