Weatherford calls soar before earnings

Weatherford is attracting enormous upside option activity ahead of quarterly results this week.

Investitute’s tracking systems show that 50,500 Weekly $6 calls expiring on May 5 were purchased today for $0.13 to $0.18 as shares traded around $5.55. The volume dwarfed the strike’s open interest of 1,368 contracts, showing that this is fresh buying.

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.

WFT gained 2.37 percent yesterday to close at $5.61. The oilfield-services company is scheduled to report earnings after the market closes on Thursday. Today’s calls are looking for the stock to rise above $6.13 to $6.18 by expiration at the end of next week.