$QEP bulls double money overnight

Traders turned quick profits in QEP Resources today.

Just yesterday, Investitute’s proprietary programs cited the purchase of 13,000 March $9 calls for $0.40 as part of a bullish spread with shares at $8.64. This was clearly a new position, as volume was far above the strike’s open interest of 4,166 contracts.

Those calls traded as high as $1.05 today, more than 2.5 times their purchase price. The stock rose 12.6% 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.

QEP surged 10.79% to $9.55 today. The natural-gas and oil producer posted a surprise profit and topped revenue expectations after the market closed yesterday.