$XEC bulls quintuple money

Option traders are racking up exponential gains from upside positions in Cimarex Energy (XEC) today.

On Aug. 28, Market Rebellion’s tracking systems flagged the purchase of 10,000 September $45 calls for $1.20 to $1.35 with shares at $41.70. This was clearly a new position, as open interest in the strike was only 693 contracts before that session began.

Those calls traded for as much as $7 today, more than 5 times their purchase prices. The stock rose 24.65% in the same time period, a large 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.

XEC is up 11.07% to $53.23 this afternoon. The oil and gas producer had been rebounding from a 52-week low of $37.19 reached on Aug. 27 and rallied sharply as the price of crude spiked higher today following the attacks on Saudi production operations.