$X call buyers see huge gains in a day

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U.S. Steel is turning large profits on positions opened just 24 hours ago.

Just yesterday, Investitute’s proprietary programs found that 4,500 Weekly $26.50 calls that expire this Friday were purchased for $0.10 to $0.37 with shares at $26.17. Volume was well above the strike’s open interest of 2,937 contracts, indicating that this was fresh buying.

Today those calls traded for $0.71, tripling in value. The stock was up 3.1 percent at the same time, illustrating how options can provide enormous leverage.

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.

X rose 3.43 percent to $26.85. The company has rallied along with other steel makers as U.S. regulators move closer to imposing limits on imports of the metal from China.

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Mike Yamamoto

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