$RRC bulls double their money

Option traders have racked up large gains in Range Resources.

On Aug. 20, Investitute’s tracking systems detected the purchase of 2,500 December $16 calls for $1 to $1.04 as part of a bullish spread with shares at $14.81. This was clearly a new position, as open interest in the strike was only 131 contracts before the session began. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for $2.40 this afternoon, nearly 2.5 times their purchase prices. The stock rose 19.11% in the same time period, showing how 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.

RRC jumped 5.31% to $17.65 today. The natural-gas and oil producer, which has rallied with the price of crude in the last month, is scheduled to report earnings on Oct. 23 after the market closes.