$XLI bulls score big profits

Bullish option traders have turned big profits in the SPDR Industrial Fund (XLI).

On Dec. 20, Market Rebellion’s Unusual Activity Service detected the purchase of 8,000 Weekly $102 calls, expiring this Friday, for $0.74 as part of a bullish spread with shares at $99.71. Open interest in the strike was just 22 contracts before that session began, showing that this was fresh buying.

Those calls traded for as much as $3.90 today, more than 5 times their purchase price. The stock rose 6.14% 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 last up by 0.16% at $105.72 in midday trade.