$X bulls post quick profits

It took less than 24 hours for option traders to nearly triple their money on upside positions in U.S. Steel.

Just yesterday, Investitute’s markets scanners showed that 2,000 Weekly $21.50 calls expiring on March 22 were purchased for $0.13 as part of a bullish spread with shares at $19.49. This was clearly a new position, as open interest in the strike was only 191 contracts before the trade occurred. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls sold for as much as $0.37 this morning, almost 3 times their purchase price. The stock rose 6.41% at the same time, 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 was up 2.05% to $20.42 today. The steel maker has rebounded along with other industrial metals this week.