$BHC call prices surge overnight

Bullish traders are racking up fast profits in Bausch Health (BHC) today.

Yesterday on Jun. 16, Market Rebellion’s Unusual Activity Scanners identified the purchase of 4,500 June $19.50 calls for $0.20 to $0.46 with shares at $18.81. This was clearly fresh buying, as volume was well above the strike’s previous open interest of just 1,706 contracts.

Those calls have traded for as much as $0.90 thus far today, nearly 3 times their average purchase price. The stock rose 6.8% in the same time frame, showing how quickly options can far outpace gains in 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 2.53% to $19.87 near midday trading. H.C. Wainwright raised its price target on the shares to $64 from $50 this morning, reiterating a Buy rating.