$PAGP bulls double money

Option traders are racking up sizable profits in Plains GP Holdings (PAGP) today.

On Sep. 24, Market Rebellion’s Unusual Activity tracking systems detected the purchase of 3,000 November $6 calls for $0.55 to $0.60 with shares at $5.76. Volume was clearly above the strike’s previous open interest of 6 contracts, indicating that this was fresh buying.

Those calls traded up to $1.12 today, about twice their purchase prices. The stock rose 19.97% in the same time period, underscoring how options can far outperform their underlying shares.

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.

PAGP was last up 5.68% to $7.07 today. The oil and gas infrastructure company has been trading higher this past week as the energy sector has rebounded from near-6-month lows. Quarterly results are scheduled for Nov. 2 after the market closes.