$X bulls post quick profits

It took less than 24 hours for option traders to double their money on upside positions in U.S. Steel (X).

Just yesterday, Investitute’s markets scanners showed that 5,200 Weekly $15 calls expiring on July 12 were purchased for $0.39 to $0.41 with shares at $14.47. This was clearly a new position, as open interest in the strike was only 340 contracts before the trade occurred. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls sold for as much as $0.85 this morning, more than 2 times their purchase prices. The stock rose 5.67% 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 to $15.30 this morning, and is currently just off those session highs with a gain of 1.81% at $15.20. The steel maker has rebounded along with other industrial metals this week while the U.S. Dollar is near three-month lows.