$WMB calls triple

Williams (WMB) has been a strong performer off its recent lows and bullish option traders are cashing in.

On Mar. 26, Market Rebellion’s Unusual Activity Service found that 2,475 May $16 calls were bought as part of a bullish roll for $1.16 with shares at $14.13. This was clearly a new position, as open interest in the strike before that session began was only 56 contracts.

Those calls traded for $3.59 today, over 3 times their purchase price. The stock rose 38.64% 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.

WMB was up 0.31% to $19.53 today. The energy-pipeline operator met quarterly earnings-per-share expectations on May 4 and backed its fiscal year EBITDA guidance.