$XLF calls prices rise overnight

Bullish traders are withdrawing fast gains today in upside option trades on the SPDR S&P Financial Fund (XLF).

Yesterday on Apr. 13, Market Rebellion’s Unusual Option Activity Service found that 100,000 April $33.50 calls were bought for $0.10 to $0.13 with shares at $32.42. This was clearly fresh buying, as open interest in the contract was just 22,275 before the activity appeared.

Those calls have traded for up $0.25 today, a 92.31% return, while the stock rose 1.39% in the same time period, an enormous move but one that was still dwarfed by the gain of its options on a relative basis.

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.

XLF closed up 0.98% at $32.88.