Bulls turn quick profit as $SWN jumps

Swn912

It took just three hours for bullish traders to double their money in Southwestern Energy today.

Just minutes after the opening bell, Investitute’s proprietary programs showed that 2,000 Weekly $5.50 calls expiring on Sept. 22 were purchased for $0.15 to $0.20 with shares at $5.44. This was clearly fresh buying, as volume was well above the strike’s open interest of 1,269 contracts.

Those calls sold for $0.42 by midday, more than doubling in value as volume swelled to 4,300 contracts. The stock rose 7.9 percent at the same time, underscoring how options can far outperform 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.

SWN surged 6.47 percent to $5.76 today. The energy producer, whose stock has been cut in half since the beginning of the year, rallied along with the price of natural gas and crude oil.

Start your free trial


Mike Yamamoto

Learn more about Unusual Option Activity and join the conversation!