$BHC bulls quintuple money

Option traders are logging exponential gains on upside positions opened in Bausch Health (BHC) only a few days ago.

On Oct. 10, Market Rebellion’s activity scanners identified the purchase of 2,400 October $19.50 calls for $0.33 to $0.40 with shares at $19.28. This was clearly fresh buying, as volume was well above the strike’s previous open interest of 1,009 contracts.

Those calls have traded for as much as $1.90 today, more than 5 times their average purchase price. The stock rose 11% in the same time frame, showing how quickly options can far outperform their underlying shares.

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.

BHC is up 2.15% to $21.35 in midday trading. Citron Research released a bullish note on the health-products company today ahead of quarterly results on the morning of Nov. 4.