$WMB bulls triple their money

Williams has been the target of upside option activity repeatedly in recent days, and those traders are already paying off.

On Aug. 2, Investitute’s market scanners identified the purchase of 5,000 August $30 calls for $0.50 to $0.72 with shares at $30.19. Volume was far above the strike’s open interest of 2,789 contracts, showing that this was fresh buying.

Those calls traded for $1.46 this morning, nearly 3 times their initial purchase price. The stock rose 3.58% in the same time frame, 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.

Williams saw more bullish option trading this afternoon, the third time in as many sessions.

WMB was up 0.64% to $31.34 today. The energy-pipeline operator surpassed quarterly expectations on the top and bottom lines on Aug. 1.