$WPX bulls double money

Option traders are logging big gains on upside positions in WPX Energy (WPX) today.

On July 18, Market Rebellion’s market scanners identified the purchase of 4,300 November $11 calls bought for $0.70 to $0.75 as part of a bullish spread with shares at $9.99. This was clearly fresh buying, as open interest in the strike was a mere 30 contracts before that session began.

Those calls traded for as much as $1.76 today, more than 2.5 times their initial purchase price. The stock rose 22.32% in the same time period, a strong move but nowhere near that of its options on a relative basis.

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.

WPX is up 9.75% to $12.05 in midday trading. The oil and natural-gas producer rallied after quarterly results on Aug. 5 and rose sharply again today with other energy names as the price of crude spiked higher.