Options News
$PBR call prices double in hours
Bullish option traders who piled into Petrobras this morning posted substantial profits by lunchtime. Less than an hour into the session, Investitute’s tracking systems flagged the purchase of 30,000 February $12.50 calls for $0.50 as part of a bullish spread with shares at $12.57. This was clearly a new position, as open interest in the […]
Bullish option traders who piled into Petrobras this morning posted substantial profits by lunchtime.
Less than an hour into the session, Investitute’s tracking systems flagged the purchase of 30,000 February $12.50 calls for $0.50 as part of a bullish spread with shares at $12.57. This was clearly a new position, as open interest in the strike was only 162 contracts before the trade occurred. Investitute co-founder Pete Najarian cited the unusual activity on CNBC’s “Halftime Report” today.
Those calls traded for $0.97 by early afternoon, just shy of doubling in price. The stock rose 5.3% at the same time, showing how quickly options can far outpace gains in 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.
PBR jumped 8.63% to $13.09 today on 4 times its average volume. The Brazilian energy giant has been climbing in the last month as the price of oil has rebounded.