$RIG call buyers triple their money again

Option traders showed strong conviction in Transocean (RIG) recently, and today their upside plays are paying off again.

On Nov. 15, Market Rebellion’s Unusual Option Activity Service detected the purchase of 10,500 December $5 calls expiring tomorrow for $0.32 to $0.36 with shares at $4.83. This was clearly fresh buying, as open interest in the strike was only 2,521 contracts before that session began.

Those calls have thus far traded up to $1.12 today, triple their purchase prices. The stock rose 26.5% in the same time frame, underscoring how options can far outperform their underlying shares.

It is the second winning trade in the name posted on Market Rebellion this month.

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 is up 1.08% to $6.10 in midday trading. The offshore energy driller has rallied off recent lows along with the price of crude, which is at levels not seen since mid-September.