$OXY bulls drill for big profits

Option traders have drilled big profits on short-term positions opened in Occidental Petroleum (OXY) three weeks ago.

On Jun. 11, Market Rebellion’s Unusual Activity Service found that 5,300 Weekly $31 calls, expiring tomorrow, Jul. 2, were bought for $0.50 to $0.57 above open interest of just 340 contracts with shares at $28.38.

Those calls traded for as much as $2.51 today, about 5 times their purchase prices. The stock rose 17.83% 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 was up 5.08% to close at $32.86 this afternoon. The oil and gas producer has risen along with the price of crude which traded to its highest level since 2018 earlier.