Call prices quadruple in $THC

Option traders racked up big profits in Tenet Healthcare today thanks to strong quarterly results.

On April 23, Investitute’s market scanners detected the purchase of 4,000 June $30 calls for $0.40 to $0.45 with shares at $23.74. This was clearly a new position, as open interest in the strike was only 1,022 contracts before the trade occurred.

Those calls traded for $1.90 during today’s session, more than 4 times their purchase prices. The stock rallied 24.3% in the same time period, a large gain but well below that of its options.

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.

THC jumped 19.13% to $28.52 today. The health-care service provider topped quarterly estimates and raised its full-year outlook after the market closed yesterday.