$XLI bulls score at highs

Patient option traders have turned big profits in the SPDR Industrial Fund (XLI) as shares track new highs.

Back on Nov. 5, Market Rebellion’s Unusual Activity programs found that 9,818 March $90 calls were bought for $1.67 in three prints with shares at $81.66. Volume was well above the strike’s existing open interest of 573 contracts, indicating that this was fresh buying.

Those calls traded for as much as $6.26 today, at least 3.5 times their purchase prices. The stock rose 17.74% in the same time period, showing how options can far outpace gains in their underlying shares.

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.

XLI was up by 0.073% at $95.49 at the closing bell. The exchange-traded fund–which tracks a basket of industrial heavy-weights, has rallied over the past month to new highs.