Silver bugs double their money in $PAAS

Silver bugs have doubled their money in Pan American Silver (PAAS) today.

Minutes after the opening bell on June 5, Investitute’s market scanners identified the purchase of 4,250 July $12 calls from $0.40 to $0.45 with shares at $11.60. Open interest in the strike was only 1,022 contracts before the trade occurred, showing that it was a new position. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for as much as $0.90 today, double their purchase prices. The stock rose 8.62% in the same time period, illustrating how quickly options can far outperform moves 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.

PAAS was up 6.71%, just off its session high, to close at $12.57. The Canada based mining company rose today, alongside the price of silver, which lifted more than 3% with a weaker U.S. Dollar.