Traders post quick gains in $DXJ

It has taken just two weeks for bullish option traders to double their money in the Wisdom Tree Japan Hedged Equity Fund.

On Sept. 20, Investitute’s proprietary programs flagged the purchase of 20,000 November $59 calls for $0.60 as part of a bullish roll with shares at $57.20. This was clearly a new position, as open interest in the strike was only 427 contracts before the trade occurred.

Those calls traded up to $1.30 today, more than twice their purchase price. The stock rose 2.8% at the same time, 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.

DXJ was up 1.28% to $58.69 today. The exchange-traded fund tracks large-cap Japanese stocks while adjusting for currency fluctuations.