EXCO Resources ripped higher yesterday, and option traders are looking for even more gains.
OptionMonster's scanners detected heavy trading in the April 8 calls for $0.24 and $0.25 yesterday, with more than 2,800 contracts changing hands in volume that was far above the previous open interest of just 11. Those calls lock in the price where investors can buy shares in the independent oil and natural-gas company, which is focused on shale resources.
The calls can generate some nice leverage if EXCO continues to climb, but will expire worthless if it doesn't. Traders use these contracts for cheap upside positions, limiting the amount of capital at risk if they get the direction wrong.