$XLE option bulls keep drilling for gains

The SPDR Energy Fund (XLE) is again pumping profits to long-term bullish option traders this session.

Back on Dec. 15, Market Rebellion’s Unusual Activity Service found that 29,400 February $58 calls were for $1.32 as part of a bullish spread above the existing open interest of 1,090 contracts with shares at $55.28.

Those calls traded for as much as $7.70 today, more than 5.5 times their purchase price. The stock rose 18.13% in the same time frame, showing how quickly options can far outperform moves in their underlying shares on a relative basis.

This marks the second winning trade in the fund posted on Market Rebellion this month.

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.