$PBR call prices soar sevenfold

Option traders are racking up huge gains in Petrobras.

On Jan. 5, Investitute’s tracking systems found that 4,500 Weekly $11.50 calls expiring this Friday were purchased in one print for $0.34 with shares at $11.05. This was a new position, as there was no open interest in the strike before that session began. Investitute co-founder Pete Najarian cited heavy buying in February calls around that time on CNBC’s “Halftime Report.”

The Weekly $11.50 calls traded for as much as $2.47 today, more than 7 times their purchase price. The stock rose 23.4% in the same time period, showing 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.

PBR was up 2.81% to $13.53 today. The energy giant announced this morning that it will repay $2.14 billion in bonds that mature in 2019.