$BHC call prices surge fourfold

Bullish traders are racking up profits in Bausch Health (BHC) today for the second session in a row.

On Oct. 11, Market Rebellion’s activity scanners identified the purchase of 2,700 October $20.50 calls for $0.39 to $0.65 with shares at $20.77. This was clearly fresh buying, as volume was well above the strike’s previous open interest of just 414 contracts.

Those calls have traded for as much as $1.96 today, about 4 times their average purchase price. The stock rose 8.09% in the same time frame, showing how quickly options can far outpace gains in their underlying shares.

It is the second winning trade in the name posted on Market Rebellion in as many days.

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 4.5% to $22.30 near midday trading. Citron Research yesterday released a bullish note on the health-products company ahead of quarterly results on the morning of Nov. 4.