$OXY traders win both ways

Occidental Petroleum bears got their fill in positions opened last week, and the bulls already seeing their positions, opened yesterday, paying off.

Just yesterday, Investitute’s tracking systems detected the purchase of 10,000 May $65 calls from $0.61 to $0.65 with shares at $60.37. This was clearly fresh buying, as open interest was just 3,690 contracts before that session began.

Those calls traded up to $1.85 today, 3 times their average purchase price. The stock rebounded 4.75% in the same time period, a huge move but still nowhere near that of its options on a relative basis. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

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.

OXY made an intraday high of $63.42 today before pulling back to close at $61.84, off by 0.29% on the session. The oil and natural-gas producer disclosed yesterday morning that it would pay $57 billion in cash and stock to acquire Anadarko Petroleum (APC).