$WMB calls double

Williams (WMB) has been a strong performer off its early 2020 lows and bullish option traders are cashing in on recent upside positions.

On Feb. 23, Market Rebellion’s UOA Service found that 5,000 May $22 calls were bought as part of a bullish roll for $1.73 to $2.02 with shares at $22.54. This was clearly a new position, as open interest in the strike before that session began was only 1,952 contracts.

Those calls have traded for $4.39 today, over 2 times their purchase prices. The stock rose 16.95% 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 last up 1.99% to $26.40 today. The energy-pipeline operator was upgraded to a Buy from Hold this morning at Argus.