$XME bulls keep mining gains

Option traders have made more gains today, quadrupling their money on upside positions in the SPDR S&P Metals and Mining Fund (XME).

On May 18, Market Rebellion’s Unusual Activity tracking systems detected the purchase of 3,200 June $21 calls for $0.65 and $0.66 above open interest of 1,584 contracts, with shares at $20.25.

Those calls traded up to $2.82 today, more than 4 times their purchase prices. The stock rose 17.58% in the same time frame, illustrating the kind of leverage that can be achieved with options.

It is the second winning trade to be posted on Market Rebellion in the ETF in the past week.

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.

XME was up 3.61% to close just off its high of the session at $23.82 today. The exchange-traded fund, which includes producers and miners of industrial and precious metals, has traded higher of late with recent weakness in the dollar.