$XLI calls double bulls’ money

Option traders have turned quick profits in the SPDR Industrial Fund as shares rebound.

On Dec. 26, Investitute’s tracking systems found that 3,000 January $61 calls were purchased for $1.94 as part of a bullish spread with shares at $60.29. Volume was far above the strike’s open interest of 234 contracts before the trade occurred, showing that it was a new position.

Those calls traded for $4.07 this afternoon, more than twice their purchase price. The stock rose 6.65% in the same time frame, illustrating the kind of leverage that can be achieved quickly with options.

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 as high as $64.70 today before pulling back with the rest of the market to close 0.27% lower at $63.77. The exchange-traded fund–which tracks a basket of industrial heavy-weights, has rallied in recent days off lows not seen since the 2016 Presidential election.