$TECK calls mining profits

Bullish option traders are mining profits in Teck Resources (TECK) calls today.

On Dec. 15, Market Rebellion’s Unusual Activity Service detected the purchase of 5,250 February $19 calls for $1.23 to $1.28 as part of a bullish roll with shares at $17.90. This was clearly fresh buying, as volume was well above the strike’s existing open interest of 571 contracts.

Market Rebellion co-founder Pete Najarian noted the activity that day on CNBC’s “Halftime Report.”

Those calls traded up to $2.55 today, 2 times their purchase prices. The stock rose 17.49% at the same time, showing how quickly 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.

TECK was up 6.57% to $20.92 at today’s close, after setting a new 52-Week of $21.04 earlier. The mining company’s price target was raised to C$28 from C$23.50 at Raymond James on Friday.