$SO calls turn more profits

Option traders are raking in profits again on bullish positions in Southern Company (SO) today.

On Jan. 16, Market Rebellion’s tracking systems detected the purchase of 5,700 Weekly $66 calls expiring on Feb. 28 as part of a bullish roll for $1.05 with shares at $65.83. Volume was above the strike’s previous open interest of only 52 contracts, indicating that this was fresh buying.

Those calls traded for as much as $3.65 today, over 3 times their purchase price. The stock rose 5.5% in the same time frame, illustrating the kind of leverage that can be achieved with options.

It is the second winning trade in the name to be posted by Market Rebellion this week.

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.

SO made a new all-time-high of $69.52 this morning, and closed at $69.44 up 0.7% on the day. The electric utility has risen with its peers in the SPDR Utilities Fund (XLU), where it is the No. 2 holding by weight, for the past eleven days.