$WFC bulls double their money

Option traders banked substantial gains in Wells Fargo today.

On July 12, Investitute’s tracking systems found that 5,400 Weekly $57 calls expiring this Friday were purchased for $0.61 to $0.75 with shares at $55.78. Volume was well above the strike’s open interest of 2,511 contracts, showing that this was fresh buying.

Those calls ended today’s session trading for $1.24, more than twice their initial purchase price. The stock rose 4.12% in the same time frame, illustrating the kind of leverage that can be achieved quickly with options. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

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.

WFC popped 2.82% to $58 today. The bank rallied along with other financial firms as interest rates climbed.