$USO option bulls score fast profits

Bullish option traders have turned fast profits with the sharp increase in the U.S. Oil Fund (USO).

On Sep. 23, Market Rebellion’s Unusual Activity Service found that 5,500 October $51.50 calls, expiring next Friday, were bought for $1.42 to $1.44 above the existing open interest of 14 contracts with shares at $51.40.

Those calls have traded for as much as $4.25 this session, nearly 3 times their purchase prices. The stock spiked 8.19% in the same time period, a large move but nowhere near that of its options on a relative basis.

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.

USO was last higher by 1.78% to $55.46 today.