$OXY call buyers strike a gusher

Option traders have drilled big profits on short-term positions opened in Occidental Petroleum (OXY) this week.

On Monday, Feb. 28, Market Rebellion’s Unusual Activity Service found that 6,300 Weekly $42 calls, expiring today, were bought for $0.63 to $1.06 above open interest of just 4,916 contracts with shares at $40.17.

Those calls traded for as much as $13.56 today, over 12 times their purchase prices. The stock rose 38.36% 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 17.59% to close at $56.15 this afternoon.