$RIG bulls post eightfold gains

Option traders have racked up exponential profits in Transocean.

On Sept. 12, Investitute’s tracking systems flagged the purchase of 8,900 November $14 calls for $0.13 to $0.17 with shares at $11.34. These were clearly new positions, as volume was far above the strike’s open interest of 3,716 contracts before the activity appeared.

Those calls rose to $1.08 this morning, more than 7 times their average purchase price. The stock rose 26.1% in the same time frame, a large move but nowhere near that of its 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.

RIG was up 1.09% to $13.95 today. The offshore driller has rallied with other energy producers as the price of crude climbed to multi-year highs this week.