$SWN call prices quadruple

Southwestern Energy (SWN) has been climbing for the last three weeks, yielding large gains on upside option positions.

On Mar. 4, Market Rebellion’s Unusual Activity Service found that 10,000 April $5 calls were bought for $0.68 above the existing open interest of 2,058 contracts with shares at $5.29.

Those calls were last marked for $3.00, over 4 times their purchase price. The stock rose 51.42% at the same time, underscoring how quickly options can far outperform 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.

SWN was last up by 4.43% to $8.01 in afternoon trading.