$X bulls double their money

Option traders have turned quick gains on upside positions in U.S. Steel (X).

On March 31, Market Rebellion’s Unusual Activity Service found that 6,400 Weekly $6.50 calls expiring on April 3 were bought for $0.04 to $0.24 with shares at $6.35. This was clearly fresh buying, as open interest in the strike was 2,709 contracts before the session began.

Those calls traded for as much as $0.38 this morning, more than twice their average purchase price. The stock rose 5.83% in the same time frame, illustrating the kind of leverage that can be achieved with options.

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.

X is up this morning. The steel maker rallied off historic lows yesterday on hopes of infrastructure spending.