$TS call buyers turn quick gains

It took just one week for bullish option traders to more than double their money in Tenaris

On April 4, Investitute’s market scanners identified the purchase of 3,000 April $35 calls at the same time for $0.95 to $1 with shares at $34.62. Open interest in the strike was only 502 contracts before the trade occurred, showing that it was a new position.

Those calls traded for $2.50 this morning, 2.5 times their purchase prices. The stock rose 7.7% 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.

TS was up 2.07% to $37.05 today. This morning Citigroup upgraded the name to “buy” from “neutral” and raised its price target ro $43 from $31.50. The Luxembourg-based company, which makes steel tubes used in oil and gas exploration, reports earnings on April 26.