Calls triple in Fairmont Santrol

Fmsa515

Bullish traders are digging up profits in Fairmont Santrol.

On May 3, Investitute’s tracking systems found that 5,000 June $5 calls were purchased for $0.52 with shares at $4.81. Open interest in the strike was only 1,544 contracts before the trade occurred as part of a bullish roll, showing that it was a new position.

Those calls traded for $1.40 today, nearly tripling in value. The stock rose 26.4 percent in the same time frame, an impressive move but one that pales in comparison to the options’ performance.

Long calls lock in the price where the 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.

FMSA jumped 8.73 percent today to close at $5.98. The fracking-sand producer rallied after quarterly results on May 4 and has been grinding higher since.

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Mike Yamamoto

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