$XLF bulls triple their money

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

On Aug. 7, Market Rebellion’s Unusual Activity tracking systems detected the purchase of 12,200 Weekly $24.50 calls, expiring this Friday, Aug. 14, for $0.20 to $0.38 with shares at $24.53. This was clearly a new position, as the volume was far above the strike’s open interest of 1,342 contracts.

Those calls have traded up to $1.23 today, more than triple their original purchase prices. The stock rose 4.73% 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 $25.31, up 1.16%.