Patient $SLB bulls tap into big gains

Bullish option traders are tapping into large gains on upside positions in Schlumberger (SLB) today.

On Oct. 2, Market Rebellion’s UOA Service flagged the purchase of 10,400 May $20 calls for $1.26 to $1.34 with shares at $15.66. This was clearly a new position, as open interest in the strike was 260 contracts before that session began.

Those calls ended the session marked at $11.10, more than 8 times their purchase prices. The stock rose 117.43% in the same time period, illustrating the kind of leverage that can be achieved 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.

SLB was up 3.8% to close at $34.05. The oil-services giant was initiated with a Buy and $38 price target at Goldman Sachs on Thursday.