$SLB bulls double money

Option traders have turned big profits on upside positions opened in Schlumberger (SLB).

On Nov. 25, Market Rebellion’s tracking systems detected the purchase of 3,100 January $32.50 calls for $4.05 to $4.80 with shares at $36.21. Open interest in the strike was only 2,749 contracts before the trade occurred, showing that this was a new position.

Those calls have traded for as much a $8.55 so far today, or about twice their average purchase price. The stock rose 13.31% in the same time frame, illustrating the kind of leverage that can be achieved with 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.

SLB is up 0.4% to $40.34 in mid-afternoon trading. The oil-services giant is the largest component of the VanEck Vectors Oil Services ETF (OIH), which has rallied as the price of crude topped levels not seen since May of last year, amid geopolitical concerns.