$XLF bulls double money

Bullish traders doubled their money today in upside option trades on the SPDR S&P Financial Fund (XLF).

On Dec. 18, Market Rebellion’s Unusual Activity scanners showed that 4,330 Weekly $28.50 calls expiring this Thursday were purchased for $0.24 as part of a bullish spread with shares at $28.46. These were clearly new positions, as the open interest in that contract before the trade occurred was just 1,063.

Those calls traded up to $0.55 today, more than double their purchase price. The stock rose 2.00% in the same time period, illustrating the kind of leverage that can be achieved through options.

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.

XLF ended the day at $28.91, up 1.65%.