Calls keep bouncing on $TPX

Option traders doubled their money on bullish positions in Tempur Sealy that expired this afternoon.

On Jan. 28, Investitute’s market scanners identified the purchase of 2,800 February $52.50 calls for $2.54 as part of a bullish roll with shares at $51.33 This was clearly a new position, as open interest in the strike was only 790 contracts before that session began.

Those calls sold for $4.85, about twice their purchase price. The stock rose 11.55% in the same time period, showing how options can far outperform their underlying shares.

It is the second winning trade in the name posted on Investitute in as many days. On CNBC’s “Halftime Report” Feb. 12, Investitute co-founder Jon Najarian cited buying in the February $55 calls, which also doubled in price.

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.

TPX was up 1.62% to $56.99 today. The mattress company fell short of earnings expectations but topped sales estimates yesterday morning.