$X bulls make fast profits

Option traders have turned fast profits on upside positions in U.S. Steel (X).

On Jul. 10, Market Rebellion’s Unusual Activity Service found that 2,100 Weekly $7 calls expiring on July 24 were bought for $0.37 to $0.39 with shares at $6.82. This was clearly fresh buying, as open interest in the strike was 1,623 contracts before the session began.

Those calls have traded for as much as $0.86 this morning, more than 2 times their purchase prices. The stock rose 13.2% in the same time frame, illustrating the kind of leverage that can be achieved with options.

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.

X is up on the day by 5.48% at $7.70. The steel maker has risen sharply off recent lows alongside a modestly weaker U.S. dollar.