$XOM call buyers turn quick profits

Option traders have more than doubled their money on bullish positions opened in Exxon Mobil just three sessions ago.

Last Thursday, Investitute’s tracking systems detected the purchase of 11,000 March $76.50 calls for $1.23 to $1.36 with shares at $76.06. These were clearly new positions, as open interest in the strike was only 508 contracts before the trades occurred. Investitute co-founder Pete Najarian noted the unusual activity at that time on CNBC’s “Halftime Report” and cited more buying today in a different strike.

The March $76.50s sold for $2.96 this morning at the end of today’s session, about 2.5 times their original purchase price. The stock rose 3.8% 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.

XOM was up 1.69% to $78.84 today. The energy giant rebounded as the price of oil rose last week.