$XME bulls rack up gains

Option traders have doubled their money on upside positions in the SPDR S&P Metals and Mining Fund (XME).

On May 1, Market Rebellion’s Unusual Activity tracking systems detected the purchase of 5,000 June $20 calls for $0.79 and $0.80 above open interest of 197 contracts, with shares at $18.86.

Those calls traded up to $1.89 today, more than double their purchase prices. The stock rose 14.79% 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.

XME was up in early trading to an intraday high of $21.65 but closed down 0.47% to $21.24 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.