XLU Call Price Surge off Lows

Option traders are posting big profits today in bullish positions opened on the State Street Utilities Select Sector SPDR ETF (XLU).

On Sep. 30, Market Rebellion’s Unusual Activity Service found that 40,000 30October 41 calls were bought for $0.41 with shares at $39.55.

Those calls have traded for up to $1.74 today, a 324.39% return, while the stock rose 7.91% in the same time frame, showing how quickly options can far outpace gains in their underlying shares.

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.

XLU settled the session down 0.72% at $42.56.